Answer:
Option (D) $27,000
Explanation:
Data provided in the question:
Cash dividends declared = $20,000
Dividends paid = $15,000
Net income = $70,000
Market value of the stock dividend = $23,000
Treasury stock = $9,000
Selling cost of the treasury stock = $7,000
Now,
Retained earnings increase during the recent year of operation will be
= Net income - Cash dividends declared - Market value of the stock dividend
= $70,000 - $20,000 - $23,000
= $27,000
Hence,
Option (D) $27,000
The next step is to decide about the resources to be committed.
The answer is the solution that best solves the problem is selected.
During the solution implementation step you should already have determined which solution you would apply to solve the problem that you encounter. By determining which solution to implement, you are on your way to solving the problem that requires your decision-making. If the solution proves to be unsuitable later on, you can refine it later on.
