Final answer:
Willie Corp declared $3,500 in dividends during the year, which decreased the equity section of the balance sheet. This calculation is based on the equity at the beginning and end of the year, net income, and the decrease in liabilities.
Step-by-step explanation:
The student has asked how to calculate dividends declared during the year for Willie Corp. based on the provided financial information. To begin with, we need to understand the equation equity at the beginning + net income - dividends = equity at the end of the year. Given that there were no changes in paid-in capital, we can solve for dividends using the balance sheet and income statement data.
At the beginning of the year, Willie Corp.'s equity was assets ($10,100) minus liabilities ($6,900), which equals $3,200. At the end of the year, equity is given as $3,900 (net assets). We also know the net income for the year was $3,000, and liabilities decreased by $1,200, which effectively increases equity by the same amount since liabilities are subtracted from assets to calculate equity. So, the change in equity due only to dividends is calculated as follows:
Beginning equity + Net income + Decrease in liabilities - End equity = Dividends
$3,200 + $3,000 + $1,200 - $3,900 = Dividends
Dividends = $3,500
Therefore, Willie Corp declared $3,500 in dividends during the year. The financial statement effect of declaring dividends is a decrease in the equity section of the balance sheet.