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The statement of stockholders equity-or the statement of retained earnings-reconciles and reports a firms net income, divid
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Answer #1

Answer1. Firms Shareholder's Equity is differene between thee Company's assets and liabilities.

It is the residual claim of the owners after debts and other liabilities have been paid.

Formula: Stockholders Equity = Total Assets-Total Liabilities

With this we conclude that Statement 2. "Equity is the difference between company's assets

and liabilities" in the question is right.

Answer2. Option B. $64,25000 is the dividend payout for the year.

Explanation: Whatever a company earns as profits/Net Income can either be distributed back to its

shareholders or can be retained back into the buiness for new and profitable investments.

Formula and Working:

Dividend Paid= Net income (-) Retained Earnings for the year

Dividend paid= Net Income (-) {Curr. year Ret Earnings balance (-) Prev.Year Ret Earnings balance}

Dividend paid= 7400000 (-) {6500000 (-) 5525000}

= 7400000 (-) 975000

= $6425000

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