Grandview Company Reported Net Earnings of $425,000 for 2014 A)Option a
B)Option B
C)Option C
D)Option D
Dividends Paid

question 91

Multiple Choice

Grandview Company reported net earnings of $425,000 for 2014.Their retained earnings were $1,125,000 on January 1, 2014, and on $1,425,000 on December 31, 2014.Grandview had 50,000 common shares outstanding throughout the year with a recorded value of $200,000.What were their dividend payout ratio and book value per share for 2014? $\begin{array}{lr}\text { Dividend } & \text { Book Value } \\\text { Pavout Ratio } & \text { per Share }\\\text { A) } 0 & \$ 4.00 \\\text { B) } 0 & \$ 32.50 \\\text { C) } 29.4 \% & \$ 4.00 \\\text { D) } 29.4 \% & \$ 32.50\end{array}$

• A)Option A
• B)Option B
• C)Option C
• D)Option D
• Dividends paid = Net income minus the change in retained earnings = $425,000 -$300,000 = $125,000, payout ratio = $125,000/$425,000 = 29.4 %, book value per share = ($200,000 + $1,425,000)/ 50,000 = $32.50

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Definitions:

Defectively Organized

Pertains to an entity or arrangement that has been set up with errors in its structure or legal compliance, affecting its validity or functionality.

Purported Shareholders

Individuals or entities that are claimed to hold shares or ownership in a company, possibly without formal recognition.

Conditions Precedent

Specific conditions that must be met before a contract becomes effective or before an obligation to perform is triggered.

De Jure

According to rightful entitlement or claim; by right of law, often distinguishing legal authority or legitimacy from de facto (or actual) power or control.