In: Accounting
McKinley Company owns 15,000 of the 50,000 outstanding shares of Ranier Corporation common stock and can exert significant influence over Ranier. During 2022, Ranier earns $350,000 and pays cash dividends of $140,000.
What is the 2022 effect on McKinley’s Retained Earnings?
Select one:
a. $63,000
b. $147,000
c. $105,000
d. $56,000
e. $42,000
Percentage of ownership = 15000/50000=30%
Mckinley's Retained earnings will increase by share of net income.
Share of net income = 350000*30%= 105000
Option C $105, 000 is correct