Question

Pressure Pumps Corporation, a manufacturer of industrial pumps, reports the following results for the year ended January 31, 20Y2:

Retained earnings, February 1, 20Y1 $61,182,000
Net income 8,072,000
Cash dividends declared 901,000
Stock dividends declared 2,560,000

Answer 1

Retained earnings for Pressure Pumps Corporation can be calculated by adding the net income and subtracting any declared dividends from the beginning retained earnings value.

Retained earnings represent the portion of a company's profits that have been not been paid out as dividends to shareholders but have been reinvested into the company for future growth and expansion.

To calculate retained earnings for Pressure Pumps Corporation for the year ended January 31, 20Y2, you would start with the beginning retained earnings of $61,182,000 and add the net income of $8,072,000.

Then, you would subtract any dividends declared, including cash dividends of $901,000 and stock dividends of $2,560,000.