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11 January, 23:49

Wendell Company provided the following pertaining to its recent year of operation:• Common stock with a $10,000 par value was sold for $50,000 cash.• Cash dividends totaling $20,000 were declared, of which $15,000 were paid.• Net income was $70,000• A 5% stock dividend resulted in a common stock distribution, which had a $5,000 par value and a $23,000 market value.• Treasury stock costing $9,000 was sold for $7,000. How much did Wendell's retained earnings increase during the recent year of operation? A. $32,000B. $45,000C. $29,000D.$27,000

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  1. 12 January, 03:27
    0
    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
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Home » Business » Wendell Company provided the following pertaining to its recent year of operation:• Common stock with a $10,000 par value was sold for $50,000 cash.• Cash dividends totaling $20,000 were declared, of which $15,000 were paid.
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