Question

Statement of retained earnings enterprises began 2000 with a retained earnings balance of 928,000. During 2000, the firm earned 377,000 after taxes. From this amount, preferred stockholders were paid 47,000 in dividends. At year-end 2000, the firm's retained earnings totaled 1,048,000. The firm had 140,000 shares of common stock outstanding during 2000. What is the change in retained earnings for the year 2000?

1) 120,000
2) 121,000
3) 122,000
4) 123,000

Answer 1

The change in retained earnings for the year 2000 is calculated by subtracting the initial retained earnings from the year-end balance, resulting in a change of $120,000.

Step-by-step explanation:

The change in retained earnings for the year 2000 can be calculated by taking the net income after taxes, subtracting dividends paid to preferred stockholders, and comparing the difference to the initial retained earnings balance. The initial balance was $928,000 and the net income was $377,000. After paying $47,000 in dividends to preferred stockholders, the amount available to add to retained earnings is $377,000 - $47,000 = $330,000. The year-end retained earnings totaled $1,048,000.

To find the change, we subtract the initial retained earnings from the year-end balance:

Change in retained earnings = Year-end retained earnings - Initial retained earnings
Change in retained earnings = $1,048,000 - $928,000
Change in retained earnings = $120,000

Therefore, the change in retained earnings for the year 2000 is $120,000.