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Turquoise and Topaz Sisters had retained earnings of $10,000 on the balance sheet but disclosed in the footnotes that $2,000 of Retained Earnings was restricted for plant expansion and $1,000 was restricted for bond repayments. Cash of $2,000 had been set aside for the plant expansion. How much of retained earnings is available for dividends?
A.$10,800
B.$14,300
C.$12,600
D.$9,100

Respuesta :

jepessoa

Answer:

No option is correct, the correct answer is $7,000.

Explanation:

If Turquoise and Topaz Sisters had retained earnings of $10,000, you must subtract the amounts restricted for plant expansions and bond repayments.

$10,000 (retained earnings) - $2,000 (plant expansions) - $1,000 (bond repayments) = $7,000 available for dividends

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