McKinley Company owns 15,000 of the 50,000 outstanding shares of Ranier Corporation common stock and can...

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

Solutions

Expert Solution

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

ekkarill92 answered 2 years ago

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