Question

At a firm's quarterly dividend meeting held on December 5, the directors declared a $1.50 per share cash dividend to be paid to the holders of record on Monday, January 1. Before the dividend was declared, the firm's accumulated retained earnings balance and cash balance were $1,280,000 and $30,000 respectively. The firm has 10,000 shares of common stock outstanding. On January 2, the cash, dividends payable, and retained earnings accounts had balances of ________.

Answer 1

Answer: $15,000, $0, and $1,265,000, respectively

Step-by-step explanation:

Based on the information given in the question, the total amount of dividend will be:

= Outstanding shares × Dividend

= 10000 × $1.50

= $15000

Amount of cash balance will be:

= Ending cash balance - Dividend

= $30000 - $15000

= $15000

Dividend payable will be:

= $15000 - $15000

= $0

Retained earnings will be:

= $1280000 - $15000

= $1265000