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Fundamentals of Financial Manageme...
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Fundamentals of Financial Manageme...
STATEMENT OF STOCKHOLDERS EQUITY Electronics World Inc. paid out $22.4 million in total common dividends and reported $144.7 million of retained earnings at year-end. The prior year’s retained earnings were $955 million. What was the net income? Assume that all dividends declared were actually paid.
To compute: The net income for Company E.
Introduction:
Retained Earnings:
The companies retain some portion of their net income to be used in the companies’ operations, expansion plans and other long term assets. That remaining portion of a company’s net incomes is called as retained earnings.
Statement of Stockholders’ Equity:
Statement of stockholders equity reports the opening and closing balance of stockholders equity with the changes incurred during the accounting period.
Given,
Amount of dividends paid is $22.4 million.
Ending retained earnings are $144.7 million.
Beginning retained earnings are $95.5 million.
Statement of retained earnings for Company E:
| E Company | |
| Statement of Retained Earnings | |
| Particulars |
Amount ($) (in millions) |
| Beginning balance of retained earnings | $95.5 |
| Add: Net Income (balancing figure) | $41.6 |
| Retained earnings available | $137.1 |
| Less: Dividends | ($22.4) |
| Ending balance of retained earnings | $114.7 |
Retained earnings available
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