The Shareholders' Equity Section of Winters Company Contained the Following

question 26

Short Answer

The shareholders' equity section of Winters Company contained the following balances as of December 31, 2010:
During 2011, Winters entered into the following transaction: On December 2, the company declared a cash dividend of $1,050, which was paid on December 27. Winters did not declare or pay any dividends during 2010. Based on this information, what amount of dividends should be declared and paid to shareholders' with common stock?
a. $350
b. $420
c. $570
d. $385

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Definitions:

Free-Rider Problem

A situation in a shared-resource system where individuals consume more than their fair share or pay less than their fair share of the cost.

Free-Rider Problem

A situation where individuals consume a public good without contributing to its cost, undermining the provision of that good.

Public Goods

are commodities or services that are provided without profit to all members of a society, either by the government or a private individual or organization.

Rival

In economics, a good or service that cannot be enjoyed by more than one person or group at the same time without diminishing its availability to others.