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Topic
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On January 5, year 2, Sardi Minerals Corp. declared a cash dividend of $600,000 to stockholders of record on January 21, year 2, and payable on February 11, year 2. The dividend is permissible under the laws of Sardi’s state of incorporation. The following data pertain to year 1:
Net income for year ended 12/31/Y1 $190,000
Additional paid-in capital, 12/31/Y1 675,000
Retained earnings, 12/31/Y1 425,000
The $600,000 dividend includes a liquidating dividend of
The $600,000 dividend includes a liquidating dividend of
$0
$175,000
$410,000
$485,000
I put 0 but the answer is $175…can someone please explain why the net income isn’t closed to retain earnings in this question…is Wiley wrong?
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