Question

On December 31 of the current​ year, Pilozzi Company has the following information​ available:

Common Stock ​$5 million
Additional Paidminusin Capital ​$4 million
Retained Earnings ​$1 million
Cash ​$1 million
Investment in Trading Securities ​$50,000

On December 31 of the current​ year, can the Board of Directors declare and pay a cash dividend of $ 2 ​million?

Answer 1

On December 31 of the current​ year, can the Board of Directors declare and pay a cash dividend of $ 2 ​million

If the company don´'t have enough cash on hand to distribute the previously announced sum to shareholders, it may have to borrow funds to honor the dividend payment.

Step-by-step explanation:

Companies can pay dividends in cash or additional shares.

If the company don´'t have enough cash on hand to distribute the previously announced sum to shareholders, it may have to borrow funds to honor the dividend payment.