Question

Crawford Fishing had a net income of $35,640 in 2022. They decided to pay $3,000 in dividends and keep the rest to help expand their production line. The profit that they keep to reinvest in the business is reported as________.

Answer 1

Answer:

The answer is Retain earning (RE).

Explanation:

The profit that they keep to reinvest in the business is reported as retain earning. The part of profit that is not payout as dividend and held for reivestment or any other purpose is included in retian earning and repoted in balance sheet as part of equity above liability section.

Retain earning = Net income - dividend

Retain earning = 35,640 - 3,000  = $ 32,640