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24 December, 10:48

Superior has provided the following information for its recent year of operation:

The common stock account balance at the beginning of the year was $20,000 and the year-end balance was $25,000.

The additional paid-in capital account balance increased $2,500 during the year.

The retained earnings balance at the beginning of the year was $75,000 and the year-end balance was $91,000.

Net income was $26,000.

How much were Superior's dividend declarations during its recent year of operation?

A. $10,000.

B. $42,000.

C. $26,000.

D. The dividend declarations can not be determined given the above information.

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Answers (1)
  1. 24 December, 12:04
    0
    Option (a) is correct.

    Explanation:

    Given that,

    Beginning balance of Retained Earnings = $75,000

    Net income = $26,000

    Ending retained earnings = $91,000

    Total Balance during the year:

    = Beginning balance of Retained Earnings + Net income

    = $75,000 + $26,000

    = $101,000

    Dividend declared:

    = Total Balance during the year - Ending retained earnings

    = $101,000 - $91,000

    = $10,000

    Therefore, the amount of dividend declared by the Superior during its recent year of operation is $10,000.
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