Question

A corporation declares $25 million in net income, $1 million in preferred stock dividends, and $7 million in common stock dividends. By how much will shareholders' equity increase on the balance sheet

Answer 1

$17 million

Step-by-step explanation:

A corporation declares $25 million as it's net income

The preferred stock dividend is $1 million

The common stock dividend is $5 million

Therefore the amount in which the shareholders stock equity will increase can be calculated as follows

= net income - preferred stock dividend-common stock dividend

= $25 million - $1 million +$7million

= $25 million -$8million

= $17 million