http://www.chegg.com/homework-help/integrative-pro-forma-statements-red-queen-re

Question

http://www.chegg.com/homework-help/integrative-pro-forma-statements-red-queen-restaurants-wishe-chapter-4-problem-19p-solution-9780132555739-exc The question is asking what is retained earnings for the current year. The retained earnings for the previous year were 175,000. Net profit for the current year after tax is 57,300 with 35,000 in cash dividends. The answer provided for current year retained earnings is 92,300. Why are they adding dividends instead of subtracting them and adding that sum to past years retained earnings?

Explanation / Answer

current year retained earnings= retained earnings for the previous year+Net profit for the current year after tax-cash dividends

=175000+57300-35000

=197300

the above is the correct answer as we deduct divideds to find retained earnings of current year

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