At December 31, 20X1, Suiza Inc. had $1,250,000 in assets and $630,000 in liabilities. For the year ended December 31, 20X1, net income was $45,000. During 20X1, $10,000 in common stock was issued, liabilities decreased $10,000, assets increased $30,000, and dividends were declared. The only accounts in the Stockholders' Equity section of the balance sheet for Suiza are Common Stock and Retained Earnings. What were total dividends declared during 20X1? A. $15,000 B. $35,000 C. $55,000 D. $75,000 E. $95,000

Question

Business

Kennedy Espinoza

27 July, 16:00

At December 31, 20X1, Suiza Inc. had $1,250,000 in assets and $630,000 in liabilities. For the year ended December 31, 20X1, net income was $45,000. During 20X1, $10,000 in common stock was issued, liabilities decreased $10,000, assets increased $30,000, and dividends were declared. The only accounts in the Stockholders' Equity section of the balance sheet for Suiza are Common Stock and Retained Earnings. What were total dividends declared during 20X1? A. $15,000 B. $35,000 C. $55,000 D. $75,000 E. $95,000

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Answers (1)

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Emanuel Mendoza · Answer 1

Option (A) is correct.

Explanation:

On January 1st,

Total assets = Total liabilities + share holders equity

= 640,000 + 580,000

= 1,220,000

On December 31st,

Total assets = Total liabilities + share holders equity

= 630,000 + 620,000

= 1,250,000

Retained earnings closing = share holders equity increases - common stock issued

= (620,000-580,000) - 10,000

= 40,000 - 10,000

= 30,000

Retained earnings closing = Net income - Dividend declared

30,000 = $45,000 - Dividend declared

Dividend declared = $45,000 - $30,000

= $15,000