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.) Assets = $ 14,700 = Stockholders' Equity PIC + RE $ 0 + $ 8,700 Liabilities + $ 6,000 + (1,100) + Beginning: Changes: E - Dividends 3,100 + Net income Ending:

Answer 1

beginning balance of assets = $14,700

ending balance of assets is $9600

thus changes in assets = (14700 - 9600) $5100

ending balance of liabilities is (6000 - 1100) $4900

retained earning ending balance (assets - liabilities)

(9600 - 4900 ) = $4700

retained earning beginning balance is $8700

thus changes in retained earning is -$4000 (4700 - 8700)

out of which $ 7100 (4000+3100) is paid as dividends and $3100 was net income

thus the total dividends declared were $7100