A company has 5,000 shares of $2 par value common stock and 2,500 shares of 7%, $120 par,
noncumulative preferred stock outstanding. The balance in Retained Earnings at the beginning of
the year was $550,000. The net loss for the current year was $41,250. If the company paid a
dividend of $1.50 per share on its common stock, what is the balance in Retained Earnings at the
end of the year?
$562,750
Please show how you got the answer.
A company has 5,000 shares of $2 par value common stock and 2,500 shares of 7%, $120 par,
noncumulative preferred stock outstanding. The balance in Retained Earnings at the beginning of
the year was $550,000. The net loss for the current year was $41,250. If the company paid a
dividend of $1.50 per share on its common stock, what is the balance in Retained Earnings at the
end of the year?
$480,25
0
$550,000
$501,250
$619,750
$562,750
Please show how you got the answer.
Solution
550,000- 41.250- (5000)* 1.50 - (2500*120*.07)= 480,250 A)