Question

Cullumber Company reported retained earnings at December 31, 2019, of $307,000. Cullumber had 190,000 shares of common stock outstanding at the beginning of 2020. The following transactions occurred during 2020. 1. A cash dividend of $0.35 per share was declared and paid. 2. 3. Net income was $288,000. Compute the ending balance in retained earnings at the end of 2020. A 10% stock dividend was declared and distributed when the market price per share was $13 per share. Retained earnings Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT Question Attempts: 2 of 3 used SAVE FOR LATER SUBMIT ANSWER

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Answer #1

Solution:

Cash dividend = 190000 *$0.35 = $66,500

Stock dividend = 190000*10% *$13 = $247,000

Retained earnings at the end of 2020 = Beginning balance + Net income - Cash dividend - Stock dividend

= $307,000 + $288,000 - $66,500 - $247,000

= $281,500

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