Question

Ridge Crest Co. has beginning Retained Earnings of $25,000, ending Retained Earnings of $33,800, and net income of $16.500. What was the amount of dividends declared during the year? Multiple Choice O $8.800 $7,700 O $8.500 O $16,500

Answer 1

Answer

1) Calculation of amount of dividend paid

Formula,

Closing retained earnings = Opening retained earnings + Net profit - Divided Paid

So, Dividend paid = Opening retained earnings + Net profit - Closing retained earnings

= $25,000 + $16,500 - $33,800

= $7,700 (Answer)

2) Deferred revenue is a Permanent Account.

Note: Permanent Account are those accounts which don't close at the end of the reporting period by passing the adjustment entry and don't the balance sheet item. Deferred revenue means payment has been received in advance from the customers for the future revenue hence it is a liability which is shown in balance sheet.