Question

Below is information related to retained earnings for five independent situations. Calculate the answer to each. 1. A company reports an increase in retained earnings of $1,280 and net income of $4,410. What is the amount of dividends? 2. A company reports beginning retained earnings of $2,530, net income of $850, and $190 dividends. What is the amount of ending retained earnings? 3. A company reports an increase in retained earnings of $3,480 and dividends of $1,490. What is the amount of net income? 4. A company reports ending retained earnings of $2,190, net income of $610, and dividends of $550. What is the amount of beginning retained earnings? 5. A company reports an increase in retained earnings of $610 and net income of $1,300. What is the amount of dividends?

Answer 1

1. $3,130

2. $3,190

3. $4,970

4. $2,130

5. $690

Step-by-step explanation:

The computation is shown below:

We know that,

The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid

So according to this formula, we solve each parts

1. Dividend = Net income - increase in retained earnings

= $4,410 - $1,280

= $3,130

2. The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid

= $2,530 + $850 - $190

= $3,190

3. Net income = increase in retained earnings + dividend

= $3,480 + $1,490

= $4,970

4. The Beginning balance of retained earnings = ending balance of retained earning + dividend - net income

= $2,190 + 550 - $610

= $2,130

5. Dividend = Net income - increase in retained earnings

= $1,300 - $610

= $690