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1. Coca-Cola reports an increase in retained earnings of $3.2 billion and net income of $6.9 billion. What is the amount of dividends?
2. PepsiCo reports an increase in retained earnings of $3.4 billion and dividends of $2.6 billion. What is the amount of net income?
3. Google reports an increase in retained earnings of $1.6 billion and net income of $1.6 billion. What is the amount of dividends?
4. Sirius Satellite Radio reports beginning retained earnings of –$1.6 billion, net loss of $1.0 billion, and $0 dividends. What is the amount of ending retained earnings?
5. Abercrombie & Fitch reports ending retained earnings of $1.56 billion, net income of $0.43 billion, and dividends of $0.06 billion. What is the amount of beginning retained earnings?
Required:
Calculate the answer to each.
1.
Dividends: Dividends are the rewards to the stockholders for investing their money in the company. Payment of dividend depends upon the decision of the management.
To determine: The amount of dividend of Company CC.
Answer to Problem 1.15E
The amount of dividend of Company CC is $3.7 billion.
Explanation of Solution
Retained Earnings can be determined by using the formula:
Given:
Increase in retained earnings is $3.2 billion and Net income is $6.9 billion.
Determine the amount of dividend paid during the year.
Hence, Company CC paid dividend of $3.7 billion.
2.
Net income: Net income is the excess amount of revenue which arises after deducting all the expenses of a company. In simple terms, it is the difference between total revenue and total expenses of the company.
To determine: The amount of net income earned by Company P.
Answer to Problem 1.15E
The amount of net income of Company P is $6.0 billion.
Explanation of Solution
Given:
Increase in retained earnings is $3.4 billion and dividends paid is $2.6 billion.
Determine the amount of net income earned during the year.
Hence, Company P has earned net income of $6.0 billion.
3.
Dividends: Dividends are the rewards to the stockholders for investing their money in the company. Payment of dividend depends upon the decision of the management.
To determine: The amount of dividend of Company G.
Answer to Problem 1.15E
The amount of dividend of Company G is $0.
Explanation of Solution
Given:
Increase in retained earnings is $1.6 billion and Net income is $1.6 billion.
Determine the amount of dividend paid during the year.
Hence, Company G paid dividend of $0.
4.
Retained earnings: Retained earnings are the portion of earnings kept by the business for the purpose of reinvestments, payment of debts, or for future growth.
To determine: The amount of retained earnings at the end, of Company SS.
Answer to Problem 1.15E
The amount of retained earnings at the end of Company SS is ($2.6 billion).
Explanation of Solution
Given:
Increase in retained earnings is ($1.6) billion and Net loss is $1.0 billion.
Determine the amount of retained earnings at the end of the year.
| Company SS | |
| Statement of Retained Earnings | |
| Particulars | Amount (in billions) |
| Balance at the Beginning | ($1.6) |
| Less: Net Loss during the year | ($1.0) |
| ($2.6) | |
| Less: Dividends Paid | $0 |
| Balance at the End | ($2.6) |
Table (1)
Hence, the retained earnings at the end of Company SS is ($2.6 billion).
5.
Retained earnings: Retained earnings are the portion of earnings kept by the business for the purpose of reinvestments, payment of debts, or for future growth.
To determine: The amount of retained earnings of Company AF.
Answer to Problem 1.15E
The amount of retained earnings at the beginning, of Company AF is $1.19 billion.
Explanation of Solution
Determine the amount of retained earnings at the beginning of the year.
| Company AF | |
| Statement of retained earnings | |
| Particulars | Amount (in billions) |
| Retained Earnings at the end | $1.56 |
| Less: Net Income | $(0.43) |
| $1.13 | |
| Add: Dividends | $0.06 |
| Retained Earnings at the beginning | $1.19 |
Table (2)
Hence, the retained earnings at the beginning of Company AF is $1.19 billion.
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Chapter 1 Solutions
Financial Accounting
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