Question

Sheffield Co. had retained earnings of $19900 on the balance sheet but disclosed in the footnotes that $2800 of retained earnings was restricted for building expansion and $800 was restricted for bond repayments. Cash of $2200 had been set aside for the plant expansion. How much of retained earnings is available for dividends?a. $12,000.b. $13,000.c. $15,000.d. $10,000.

Answer 1

$16,300

Step-by-step explanation:

Calculation to determine How much of retained earnings is available for dividends

Using this formula

Retained earnings=Retained earnings - Retained earnings for restricted plant expansion - Restricted for bond repayments

Let plug in the formula

Retained earnings= $19,900 - $2,800 - $800

Retained earnings= $16,300

Therefore the amount of retained earnings that is available for dividends is $16,300