Garcia Company began 2010 with net assets of $80, 000.Net income calculated by using the capital maintenance concept was $21, 000.During 2010 owners contributed $26, 000 of new capital.By year-end, the net assets totaled $78, 000.Dividends to the owners during 2010 were
A)$49, 000
B)$28, 000
C)$23, 000
D)$ 2, 000

Question

Quizplus · Accepted Answer

The dividends to the owners can be calculated by adjusting the net assets for the net income and the new capital contributions. Starting with net assets of $80,000, adding net income of $21,000, and new capital of $26,000 gives a total of $127,000. Subtracting the year-end net assets of $78,000 from this total gives the dividends amount of $49,000.

Garcia Company Began 2010 with Net Assets of $80, 000