The ending Retained Earnings balance of Juan's Mexican Restaurant chain increased by $3.2 million from the beginning of the year.

The ending Retained Earnings balance of Juan's Mexican Restaurant chain increased by $3.2 million from the beginning of the year. The company declared a dividend of $1.3 million during the year. What was the amount of net income during the year?

A) $1.9 million.

B) $3.2 million.

C) $4.5 million.

D) $1.3 million.

Answer: C

The ending balance of Retained Earnings can best be described as:

A) The amount of cash received from stockholders over the life of the company.

B) The amount of net income over the life of the company not paid to owners in the form of dividends.

C) The amount of dividends paid over the life of the company.

D) The amount of net income over the life of the company.

Answer: B

When a company prepares closing entries, which one of the following is NOT a correct closing entry?

A) Debit Retained Earnings; credit Salaries Expense.

B) Debit Dividends; credit Retained Earnings.

C) Debit Service Revenue; credit Retained Earnings.

D) All of the other answers are incorrect.

Answer: B