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How is the retained earning maintained at $5m ? cannot get the rationale behind this.
I suppose I think retained Earnings will increase by 2016 projected value, so 2.6+2.4=5
6shahir is correct. The retained earnings are currently 2.6, the forecast profit for 2016 is 2.4 (and the question says this will not change), so the retained earnings will end up being 5.0
It is the missing figure to make the Statement of financial position balance.
Once you have got all the other figures then cash is just the missing figure to make it add up.
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