Ribbon Industries Reported Sales of $3 Million and Net Income

question 106

Multiple Choice

Ribbon Industries reported sales of $3 million and net income of $400,000 for 2010.The retained earnings balance at the end of 2012 is $7 million.Ribbon Industries has a dividend payout ratio of 30%.If sales are expected to increase by 25% next year,what will be the projected balance in retained earnings using the percent of sales method?

• A) $7,280,000
• B) $6,720,000
• C) $7,350,000
• D) $8,750,000

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Definitions:

Bank Reconciliations

The process of comparing and matching the balance of an accounting record (ledger) with the corresponding bank statement, identifying and rectifying any discrepancies.

Cash Account

A type of financial account that records cash transactions, including the receipt and spending of cash.

Check Register

A record, often part of a ledger or accounting software, used to track checks issued, deposits, and current account balances.

Cleared

Refers to transactions that have been reconciled and confirmed by a bank or financial institution, indicating that funds have been successfully transferred.