CFA Practice Question

There are 191 practice questions for this study session.

CFA Practice Question

Last year, Flower Buds had equity accounts as follows:

Common Stock ($1 Par Value): $60,000
Retained Earnings: $12,000
Total Shareholder's Equity: $72,000
Projected income is $72,000 and a $0.50 dividend per share is to be paid immediately.

What will be the ending retained earnings account?

A. $42,000
B. $54,000
C. $114,000
Correct Answer: B

RE0 = NI - DIV = 72,000 - .5(60,000) = 42,000
RE1 = RE-1 + RE0 = 12,000 + 42,000 = 54,000

User Contributed Comments 2

User Comment
Indira Ending RE = Beg RE + NI - DIV
12,000+72,000-0.5(60,000)=54,000
Inaganti6 Now only if the real exam had questions this easy.
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