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retained earnings and stocks

Asked Nov 19, 2011, 10:58 AM — 1 Answer
Bio-Tech Company has had a very successful year and earnings are $21million. The company has 12 million shares outstanding and will pay a dividend of $1.00/share. The old value of retained earnings account is 125 million. What is the retained earnings for the year and the new value of retained earnings account?
A. $21 million & $146 million
B. $9 million & $134 million
C. $12 million & $137 million
D. None of the above

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pready Posts: 2,656, Reputation: 882
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Nov 19, 2011, 11:04 AM
To calculate the dividends you need to take 12 million shares outstanding times $1.00 per share.
So: 12 million * $1.00 = dividneds

Now the $21 million - dividends = Retained Earnings for the Year.

Retained Earnings for the Yer + the old value of Retained Earnings = New value of Retained Earnings.
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