Question

Harrison Recyclers Company uses the indirect method to prepare its statement of cash flows. Refer to the following information for 2017:
1. Retained Earnings, beginning balance, $142,000
2. Retained Earnings, ending balance, $122.000
3. There is a net loss of $14,000 for the year.
What is the amount of dividends declared during the year?

A. $7,000
B. $6,000
C. $16,000
D. $34,000

Answer 1

Answer:                                                                  $

        Retained earnings beginning balance   142,000

        Net loss for the year                                  (14,000)

                                                                              128,000

       Retained earnings ending balance           (122,000)

       Amount of dividend declared                       6,000

 

Explanation:  In order to calculate the amount of dividend declared, there is need to deduct the net loss for the year from retained retained earnings beginning balance.  Thereafter, we also need to deduct retained earnings ending balance.