A company earned net income of dollar100,000 during the year ended December 31.

Question

A company earned net income of dollar100,000 during the year ended December 31. 2014. On December 15. the company declared the regular dividend on its 1% preferred stock (12,500 shares with total par value of dollar125,000) and a dollar0.25 per share dividend on its common stock (55.000 shares with total par value of dollar550,000). The company paid the dividends on January 4. 2015. Did Retained Earnings increase or decrease during 2014? By how much? During 2014, retained earnings by dollarSquare.

Explanation / Answer

retained earnings decreased by $ 15000 (0.01*125000)+(0.25*55000)

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