Butler Corporation has a balance of $165 million in retained earnings at the beginning of the fiscal year. At the end of the fiscal year the balance in retained earnings is $200 million. Which of the following statements are true? a. Dividends declared are greater than Net Income. b. Dividends declared are less than Net Incomec. Net Income is at least $35 milliond. Dividends must be less than $35 million

Option c is the correct answer.

Explanation:

The net income earned by a company in a year is treated in two ways. It is either paid out as dividends or transferred to the retained earnings account or both. The ending balance of retained earnings account can be calculated by the following equation.

Ending balance = Opening balance + Net Income - Dividends

As the ending balance of retained earnings account in the question is $200 million and the opening balance is $165 million, the addition to retained earnings account is of 200 - 165 = $35 million.

We know for sure that net income is at least $35 million. Apart from this, with the given information, we cannot determine the amount of net income or the dividends paid or whether it is more or less than net income. Thus, option c is the correct answer.

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