Use the following information for questions 68 and 69.
The balance in retained earnings at December 31, 2014 was $1,080,000 and at December 31, 2015 was $873,000. Net income for 2015 was $750,000. A stock dividend was declared and distributed which increased common stock $375,000 and paid-in capital $165,000. A cash dividend was declared and paid.
-The amount of the cash dividend was
A) $372,000.
B) $417,000.
C) $582,000.
D) $957,000.

Question

Quizplus · Accepted Answer

The change in retained earnings from 2014 to 2015 is ($207,000) ($1,080,000 - $873,000). This represents the amount that was distributed between stock dividends, paid-in capital, and cash dividends. The stock dividend increased equity by a total of $540,000 ($375,000 common stock + $165,000 paid-in capital), leaving $333,000 ($540,000 - $207,000) to be distributed as cash dividends.

Use the Following Information for Questions 68 and 69