Question

Turquoise and Topaz Sisters 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?

A. $8,000

B. $7,000

C. $5,000

D. $10,000

Answer 1

$5,000 because 10,000-2,000=8,000 is left then another 2,000 taken out would leave you with 6,000 then 1,000 taken would leave you with $5,000