Question

A company has net income of $225,000 and declares and pays dividends in the amount of $75,000. What is the net impact on retained earnings

Answer 1

Answer: Increase of $150,000

Step-by-step explanation:

Net income = $225,000

Dividend = $75000

Retained earnings will be:

= Net income - Dividend

= $225,000 - $75,000

= $150,000

Based on the calculation above, the net impact on retained earnings is an increase of $150,000.