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Question
A company has 200,000 shares of $1 par value common stock and 20,000 shares of 7%, $100 par, cumulative preferred stock outstanding. The balance in Retained Earnings account at the beginning of the year was $1,500,000 and one year's dividends were in arrears. Net income for the current year was $2,000,000. If the company paid a dividend of $3 per share on its common stock, what is the balance in Retained Earnings account at the end of the year?
A. $3,500,000
B. $2,900,000
C. $2,760,000
D. $2,620,000
E. $620,000
Answer
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