Question

Presented in the bar charts are three columns for each of the first three years of a company's operations. The three columns represent amounts reported at the end of each year – net income (left), dividends (middle), and retained earnings (right). Examine the graphs and respond to the following questions. Net Income, Dividends, and Retained Earnings $300 $250 110 $200 $150 90 90 $100 150 120 $50 100 80 80 80 40 30 20 $0 NI Div RE NI Div RE NI Div RE Year 2 Year 1 Year 3 Click here to open the graph(s) in a new tab. Required: |1. What is the amount of Retained Earnings at the end of Year 1? At the end of Year 2, the company reports Net Income of $120. 2a. This amount includes: 2b. What amount of dividends did the company declare in Year 2? 2c. What is the ending balance of Retained Earnings in Year 2? 2d. The ending balance of Retained Earnings in Year 2 includes: 3a. What amount of Net Income did the company report in Year 3? 3b. What amount of dividends did the company declare in Year 3? 3c. What is the ending balance of Retained Earnings in Year 3? 3d. The ending balance of Retained Earnings in Year 3 includes:

Answer 1

$80 is the amount of Pelained Earning at the end of year 1. 29. Net Income at the end of the year 2, Includes Retained earning and Dividevel declared at the end of year 2. 26. 830 as shown in graph is the dividend declared by the company in the year 2. 20 Ending balance of retained earning is (880 for year I and 890 for year a] Total = sotto = $170 ad. Endling balance of Retained Earning in year a Includes - & Retained earning for year I + Retained farning for years -_ -) - 80 + 90 - $ 170, 30 In Year 3, keforled. Intense by Cempony is $ 150 - 3ba In year. 3, company declare divedenel of $40 3c Eneling balance of letarted earning in year 3 is $ 280, 3d Eneling balance of refermed earning includes Returned earing at end of year I t year I t year 3 - 8 so ot 890 + $ llo = $280. to Retained earning that part of Net Income which is Undistribule among shareholders. Note: Retained