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    dfantaski's Avatar
    dfantaski Posts: 1, Reputation: 1
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    #1

    Nov 19, 2011, 11:58 AM
    retained earnings and stocks
    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
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #2

    Nov 19, 2011, 12:04 PM
    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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