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    Statement of Retuned Earnings

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    1. Last year, Jefferson Motors had retained earnings of $710,000 at the end of the year. This year, Jefferson paid a dividend of $55,000 and its end of the year retained earnings was $780,000. What was the net income of Jefferson motors?

    2. In your opinion if the firm has a high retained earnings balance, could it still need to borrow cash to make required payments?

    3. What if the firm finished this year with exactly the same amount of retained earnings as it had at the end of last year? Would that mean that the dividend must equal the net income, negative net income this year, no dividends this year or even had a zero net income this year, and what do you think and why?

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    Answer 1
    Retained Earnings at the end of the year $780,000
    Add: Dividend Paid $55,000
    Total $835,000
    Less: Retained Earnings at the beginning of the year $710,000
    Net Income for the year $125,000 ...

    Solution Summary

    Step by step solution showing the net income of Jefferson motors and other solutions in details.