## Retained Earnings:

The amount of net income that remains after the cash dividends are paid by the company to the shareholders is called the retained earnings. It is the income retained for the purpose of being used for reinvestment in the future without needing external financing. The undistributed net income is accumulated each year to the retained earnings account and it belongs to the common shareholders.

That Wich Corp's earnings per share are $3.79. Explanation: That Wich Corp. has shared the following data: • Additions to retained earnings =$357,482
• Dividends paid = $211,462 • Ending total equity =$4,965,548
• Number of shares of common stock = 150,000 shares

Computation:

The first step is to determine the net income:

• Net income = Additions to retained earnings + Cash dividends paid
• Net income = $357,482 +$211,462
• Net income = $568,944 The second step is to derive the earnings per share (EPS): • EPS = (Net income - Preferred dividend) / Number of shares of common stock • EPS = ($568,944 + $0) / 150,000 shares • EPS =$3.79