Question

At the beginning of its current fiscal year, Willie Corp's balance sheet showed assets of $11,700 and liabilities of $6,800 During the year, liabilities decreased by $1,100. Net income for the year was $3,250, and net assets at the end of the year were $5,750. There were no changes in paid-in capital during the year Calculate the dividends, if any, declared during the year (Negative amounts should be indicated by a minus sign) 6800|-| s (1.100) Begningls 11,700|-| $ 이+ Dividends Net income Ending Ne Hints References eBook &Resources Hint 8 Check my.work 2 3 5 6

Answer 1

Solution :- Calculation of Dividends Declared during the year :-

Calculation of Shareholder's Equity at the beginning of the year :-

Net Assets at the beginning of the Year	$ 11700
Less : Liabilities at the beginning of the year	($ 6800)
Shareholder's Equity at the beginning of the year	$ 4900

Calculation of Shareholder's Equity at the End of the year :-

Net Assets at the end of the Year = $ 5750

During the year, Liabilities decreased by $ 1100.

Therefore , Liabilities at the End of the Year = $ 6800 - $ 1100 = $ 5700

Net Assets at the End of the Year	$ 5750
Less : Liabilities at the End of the year	($ 5700)
Shareholder's Equity at the End of the year	$ 50

Calculation of Change in Shareholder's Equity during the the year :-

Shareholder's Equity at the beginning of the Year	$ 4900
Less : Shareholder's Equity at the end of the year	($ 50)
Decrease in Shareholder's Equity During the year	$ 4850

There is Decrease in Shareholder's Equity during the year of $ 4850. Shareholder's Equity includes Paid up capital & Retained Earnings. Since it is given that there is no change in paid in capital during the year , therefore we can say that Entire decrease in Shareholder's equity is due to decrease in Retained Earnings.

Decrease in Retained Earnings	$ 4850
Add : Net Income for the year	$ 3250
Dividends declared the year	$ 8100

Dividends declared during the year = $ 8100