Question

At the beginning of its current fiscal year, Willie Corp.’s balance sheet showed assets of $12,100...

At the beginning of its current fiscal year, Willie Corp.’s balance sheet showed assets of $12,100 and liabilities of $6,100. During the year, liabilities decreased by $1,000. Net income for the year was $2,550, and net assets at the end of the year were $6,550. There were no changes in paid-in capital during the year. Required: Calculate the dividends, if any, declared during the year. (Negative amounts should be indicated by a minus sign.)

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Answer #1

solution:

Here we can get stockholders' equtiy at beginning of the year:

Stockholders' equity at the beg. = Beg. Assets - Liablilities

= $12,100 - 6,100 = $6,000

now , Stockholders' equity at the end = Net assets at the end(i.e. assets-liab.)

= $6,550

since, changes in paid in capital is nothing, so if any change happened in Stockholders' equity is due to change in retained earnings.

And we know that, Stockholders' equity at the beg.+ Net income- dividend = Stockholders' equity at the end

$6,000 + $2,550 - Dividend = $6,550

Thus, dividend declared during the year = $8,550 - 6,550 = $2,000

note: Please check and let me know.

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