Question

At the beginning of its current fiscal year, Willie Corp.’s balance sheet showed assets of $11,400 and liabilities of $5,700. During the year, liabilities decreased by $1,200. Net income for the year was $3,050, and net assets at the end of the year were $6,150. There were no changes in paid-in capital during the year.
Required:
Calculate the dividends, if any, declared during the year.
Stockholders' Equity
Assets = Liabilities + PIC + RE
Beginning $11,900 = $6,300 + 0 +
Changes = (1,200) + 0 +
Ending = + +

Answer 1

Answer:

$8,750

Explanation:

ASSETS = LIABILITIES + PAID IN CAPITAL + RETAINED EARNINGS

beginning of the year:

$11,400 = $5,700 + paid in capital + retained earnings

paid in capital + beginning retained earnings = $5,700

end of the year:

$6,150 = $4,500 + paid in capital + retained earnings

paid in capital + ending retained earnings = $1,650

ending retained earnings = beginning retained earnings + net income - dividends = beginning retained earnings + $3,050 - dividends

paid in capital + beginning retained earnings - $5,700 = 0

paid in capital + beginning retained earnings + $3,050 - dividends - $1,650 = 0

let X = paid in capital

let Y =beginning retained earnings

X + Y - $5,700 = X + Y + $3,050 - dividends

we eliminate X and Y

-$5,700 = $3,050 - dividends

dividends = $5,700 + $3,050 = $8,750