E2.5 A hospitality operation began with retained earnings of $126,000. During the year, cash dividends of $55,200 were paid to the owners. Net income for the year was $228,000. Answer the following:

a. What is the ending balance of retained earnings?

b. What would be the ending balance of retained earnings if a net loss of $22,200 had been reported rather than the net income?

E2.6 A food department reported sales revenue of $125,800 and direct costs of $65,000 during March. Determine the following:

a. What is the department’s contributory income?

b. What is contributory income as a percentage of sales revenue?