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Ra us Blac @ UHD l univer Take Test Financial Aco × | + v/ https:/ ssessmen isp?course-as 128824.1&ccourse; id 60165 1&new; attempt-1&ccontent; id-2112 QUESTION 7 Rder to the information provided for Davis Construction, Inc. and calculate its retained earnings balance at December 31, 2012 Davis Construction Inc. Davis Construction began operation on January 1, 2012, with an initial investment of $100,000 from each of its three stockholders. During the year ending 2012 Davis Construction had net income of $125,000 and paid dividends of $50,000 O a. $275,000 O b.5150,000 ° C. $175,000 O d.$ 75,000 QUESTION 8 If a company has $10.500,000 of revenues, declares and pays $550,000 in dividends, and has net income of $1,600,000, how much were expenses for the year? O a. $8,900,000 O b. $1,050,000 ° C. $8,350,000
Explanation / Answer
Question 7
Net Profit for the year = $ 125,000
(-) Dividends paid = ($ 50,000)
Retained Earnings Balance = $ 75,000
Answer is 'D' $ 75,000.
The initial investment of $ 100,000 from each of its 3 shareholders will not form part of Retained earnings balance.
Question 8
Revenue = $ 10,500,000
(-) Net income ($ 1,600,000)
Expenses = $ 8,900,000
Answer is 'A' $ 8,900,000.
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