Homework Answers
1. Declaration of dividend will lead to increase in dividend payable of $ 3000 and decrease in retained earnings by $ 3000
2. Payment of dividend will lead to dividend payable decrease, cash decrease and financing cash outflow of $ 3000
7. Common stock will increase by 30000 shares x $ 10 = $ 300,000
8. Excess of paid up capital will increase by 30000 shares x $ 6 = $ 180,000
9. Retained earnings balance at year 1 end would be 12500 - 7500 -1000 = $ 3500
10. Retained earnings balance at year 3 end would be 3500 + 20000-14000-2000+30000-21500-3000 = $ 13000
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