Question

Suppose a company had $9 million net income for year 2014, and paid out dividends of...

Suppose a company had $9 million net income for year 2014, and paid out dividends of $0.5 per share. The company has 10 million shares outstanding. If the company had $35 million retained earning at the end of year 2013, the balance of the retained earnings now (year 2014) is $_____ millions. Answer in millions, and round it to a whole million. Do not include the $ sign or comma, e.g., 55 (for $55 million).

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Answer #1

Answer - 39 million

Reason - addition to retained earning = total net income - dividend

Addition to retained earnings = 9 million - ( 10 million shares * 0.5 per share)

Addition to retained earning = 9 million - 5 million

Addition to retained earning = 4 million

Therefore, total retained earning = opening balance of earning + addition

Total retained earnings (2014) = 35 million + 4 million = 39 million.

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