At the beginning of its current fiscal year, Willie Corp.’s
balance sheet showed assets of $15,000 and liabilities of $6,500.
During the year, liabilities decreased by $1,000. Net income for
the year was $2,450, and net assets at the end of the year were
$9,050. There were no changes in paid-in capital during the
year.
Required:
Calculate the dividends, if any, declared during the year. Indicate
the financial statement effect. (Enter decreases with a
minus sign to indicate a negative financial statement
effect.)
Ending liabilities = $6,500 - $1,000 = $5,500
Ending net assets = Ending assets - Ending liabilities
$9,050 = Ending assets - $5,500
Ending assets = $9,050 + $5,500 = $14,550
Ending assts = Ending liabilities + Ending retained earnings
$14,550 = $5,500 + Ending retained earnings
Ending retained earnings = $14,550 - $5,500 = $9,050
Dividend = Beginning RE + Net income - Ending RE
= $8,500 + $2,450 - $9,050
= $1,900
Assets | = | Liabilities | + | PIC | + | RE | ||
Beginning: | $15,000 | = | $6,500 | + | $0 | + | $8,500 | |
Changes: | -$1,900 | Dividend | ||||||
$2,450 | Net income | |||||||
Ending: | $14,550 | = | $5,500 | + | $0 | + | $9,050 |
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