Question

AT&T had retained earnings of $10,000 on the balance sheet but disclosed in the footnotes that $2,000 of retained earnings was restricted for plant expansion and $1,000 was restricted for bond repayments. Cash of $2,000 had been set aside for the plant expansion. How much of retained earnings is available for dividends?

Answer 1

Nill

Step-by-step explanation:

Retained Earnings by definition is the portion of business profit not available for distribution to shareholders. In this scenario, $10,000 is the total retained earnings. And even if $5000 was penciled down for specific purposes, the balance being $5000 will still not be available as dividends.