Question

Dawson Corporation has the following information available for 2014: (in millions) Issued common stock $45 Retired common stock $65 Paid dividends $75 Net income $130 Beginning Common Stock balance $625 Beginning Retained Earnings balance $475 Based on this information, what is Dawson's Retained Earnings balance at the end of the year? a. $680 b. $530 c. $420 d. $605

Answer 1

b. $530

Step-by-step explanation:

As provided retained earnings opening balance = $475

Add net income for the year = $130

Balance = $605

Further dividend is paid, which reduces the balance of retained earnings = $75

Balance after paying dividends = $605 - $75 = $530

All the other information provided in question relates to common stock and has no relevance on retained earnings balance.

Therefore, balance of retained earnings at the end of period = $530