At the Beginning of 2011, Hamilton Company Had Retained Earnings

question 93

Multiple Choice

At the beginning of 2011, Hamilton Company had retained earnings of $150,000.During the year Hamilton reported net income of $75,000, sold treasury shares at a "gain" of $27,000, declared a cash dividend of $45,000, and declared and issued a small share dividend of 1,500 shares ($10 par value) when the fair value of the shares was $30 per share.The amount of retained earnings available for dividends at the end of 2011 was:

• A)$184,500.
• B)$162,000.
• C)$157,500.
• D)$135,000.

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Definitions:

Discount Rate

The interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows, influencing investment decisions and valuation.

Compounded Interest

Interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan.

Effective Annual Rate

The real interest rate on an investment or loan, taking into account the effect of compounding interest as opposed to just the nominal or stated rate.

Compounded Monthly

Interest on a loan or investment calculated monthly on both the initial principal and the accumulated interest from previous periods.