Question

Exercise 1-15A Calculate amounts related to the balance of retained earnings (LO1-3) Below are approximate amounts related to retained earnings reported by five companies in previous years. Coca-Cola reports an increase in retained earnings of $3.2 billion and net income of $6.9 billion. PepsiCo reports an increase in retained earnings of $3.4 billion and dividends of $2.6 billion. Alphabet reports an increase in retained earnings of $1.6 billion and net income of $1.6 billion. Sirius XM Satellite Radio reports beginning retained earnings of −$1.6 billion, net loss of $1.0 billion, and $0 dividends. Abercrombie & Fitch reports ending retained earnings of $1.56 billion, net income of $0.43 billion, and dividends of $0.06 billion. (Enter your answers in billions rounded to 2 decimal places. Negative amounts should be indicated by a minus sign.) Required: What is the amount of dividends of Coca-Cola? What is the amount of net income of PepsiCo? What is the amount of dividends of Alphabet? What is the amount of ending retained earnings of Sirius XM Satellite Radio? What is the amount of beginning retained earnings of Abercrombie & Fitch?

Answer 1

1) $3.7 billion

2) $6 billion

3) 0

4) -$2.6 billion

5) $1.19 billion

Step-by-step explanation:

(1) The amount of dividend of Coca-cola can be calculated as follows

Net income - increase in retained earnings

= $6.9 billion - $3.2 billion

= $3.7 billion

(2) The net income of PepsiCo can be calculated as follows

= increase in retained earnings + dividend

= $3.4 billion + $2.6 billion

= $6 billion

(3) The dividend of Alphabet can be calculated as follows

= increase in retained earnings -net income

= $1.6 billion - $1.6 billion

= 0

(4) The ending retained earnings of Sirius XM satellite radio can be calculated as follows

= beginning retained earnings - net loss-dividends

= -$1.6 billion -$1.0 billion - 0

= -$2.6 billion

(5) The amount of beginning retained earnings of Abercrombie and Fitch can be calculated as follows

Ending retained earnings - net income + Dividend

= $1.56 billion - $0.43 billion + $0.06 billion

= $1.19 billion