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14 August, 21:41

A company has retained earnings of $94,000 as of December 31, 2014. The Pro-forma income statement projects net income of $22,000 for 2015. The company expects to declare their annual dividend on March 15, 2015 of $0.70 per share and has a total of 100,000 shares outstanding. What will the projected retained earnings account be as of December 31, 2015? a. $186,000 b. $46,000 c. $16,000 d. $2,000

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  1. 14 August, 22:05
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    b. $46,000

    Explanation:

    The computation of the projected retained earnings is shown below:

    The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid

    where,

    Dividend = 100,000 shares * $0.70 = $70,000

    The other items values would remain the same

    So, the projected retained earnings would be

    = $94,000 + $22,000 - $70,000

    = $46,000
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