QUESTION 3

1. Holly Jolly Company had beginning retained earnings of $300,000; taxable income for the year of $45,000; net income per books for the year of $55,000; Federal income tax per the books of $12,000; dividends paid of $65,000. The amount of retained earnings at the end of the year per Schedule M-2 is:

   		$302,000
   		$290,000
   		$278,000
   		$280,000