Question

In Q1 2018, CNA Companies reports the following transactions: Capital expenditures of $15 million Loss on sale of equipment of $6 million Debt principal repayment of $8 million Preferred dividend of $2 million Common dividend of $3 million Share buyback of $4 million Ignoring the effect of taxes, what is the impact of these transactions on retained earnings

Answer 1

-$11 million

Step-by-step explanation:

According to the scenario, computation of the given data are as follow:-

We can calculate the impact of transactions on retained earnings by using following formula:-

Impact of transactions on retained earnings = - common dividend - preferred dividend - loss on sale of equipment

= -$3 million - $2 million - $6 million

= - $11 million

All three items should be deducted as it has a negative impact on the retained earnings