Question

I have no clue how to figure out what the dividends are, our book has no explanation on how to find the amount for dividends as all of the problems provide it within the question. Help!

Required intormation The following information applies to the questions displayed below.] Ricky's Piano Rebuilding Company has been operating for one year. On January 1, at the start of its second year, its income statement accounts had zero balances and its balance sheet account balances were as follows: Cash Accounts Receivable Supplies Equipment Land Building s 6,800 Accounts Payable $12,600 1,850 Notes Payable (long-term) 14,500 Common Stock 10,050 Retained Earnings 20,200 32,750 Deferred Revenue (deposits)3,250 45,500 7,500 17,300 Following are the January transactions: a. Received a $870 deposit from a customer who wanted her piano rebuilt in February b. Rented a part of the building to a bicycle repair shop: $355 rent received for Januany. c. Delivered five rebuilt pianos to customers who paid $12.775 in cash. d. Delivered two rebuilt pianos to customers for $6,400 charged on account. e. Received $5,300 from customers as payment on their accounts f. Received an electric and gas utility bill for $675 for January services to be paid in February g. Ordered $945 in supplies. h. Paid $1,750 on account in January i. Paid $11,000 in wages to employees in January for work done this month. J. Received and paid cash for the supplies in (g)

Answer 1

Answer

In the current case Dividend is Zero (Nil) hence Ending retained earnings = 17,300+ 7855 = $25,155

Cash dividends (usually referred to as "dividends") are a distribution of the corporation's net income. As such, dividends are not expenses and do not appear on the corporation's income statement.

Before dividends can be distributed, the corporation's board of directors must declare a dividend. The date the board declares the dividend is known as the declaration date and it is on this date that the liability for the dividend is created. Legally, corporations must have a credit balance in Retained Earnings in order to declare a dividend. Practically, a corporation must also have a cash balance large enough to pay the dividend and still meet upcoming needs, such as asset growth and payments on existing liabilities.

There is no formula to figure out dividend number. Before dividends can be distributed, the corporation's board of directors must declare a dividend. This information will have to be provided in the problem itself.