Question

cobb co. purchased 10,000 shares (2% ownership) of roe co. on february 12. cobb received a stock dividend of 2,000 shares on march 31 when the carrying amount per share on roe's books was $35 and the market value per share was $40. roe paid a cash dividend of $1.50 per share on september 15. in cobb's income statement for the year ended october 31, what amount should cobb report as dividend income?

Answer 1

cobb must include $18,000 as dividend income in its income statement for the current year.

Given,

10,000 shares were bought.

2 ownership

2,000 shares of stock were received as a dividend.

The market price per share is $40.

$1.50 per share in cash dividends

The formula listed below can be used to determine dividend income:

Number of Shares x Dividend Per Share = Dividend Income

Dividend Income = 12,500 divided by $1.50

$18,000 is the dividend income.

the dividend income is $18,000 as a result.

Amounts delivered to the company's shareholders are referred to as dividend income dividend income. As a result, the company's profits or earnings are used to pay out dividends.

Learn more about dividend income here:

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