Question

At the beginning of its current fiscal year, Willie Corp.'s balance sheet showed assets of $14,700 and liabilities of $6,000. During the year, liabilities decreased by $1,100. Net income for the year was $3,100, and net assets at the end of the year were $9,600. 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.) Beginning: Changes: Stockholders' Equity Assets = Liabilities + PIC + RE $ 14,700 = $ 6,000 + $ 0 + $ 8,700 = (1,100) + 0 + - Dividends 3,100 + Net income Ending:

Answer 1

Dividend if any declared during the year is $1200.

Dividend

= Beginning RE + Net Income - Ending RE

= $7700 + $3100 - $9600

= $1200

where,

Beginning RE = $14700 - $6000 = $7700

Ending Liabilities = Beginning Liabilities - Decrease in liabilities = $6000 - $1100 = $4900

Now,

Ending net assets = Total assets at the end - Ending Liabilities =

$9600 = Total assets at the end - $4900

Total assets at the end = $9600 + $4900 = $14500

Now,

Ending RE = Assets at the end - Liabilities at the end = $14500 - $4900 = $9600