Taylor Company Follows the Indirect Method to Prepare Its Statement $\quad$

question 102

Multiple Choice

Taylor Company follows the indirect method to prepare its statement of cash flows. Refer to the following portion of the comparative balance sheet: $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Taylor Company
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Comparative Balance Sheet
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ December 31, 2014 and 2013
$\begin{array}{lrrc}\hline&2014&2013& \text { Increase/decrease } \\ \text { Common Stock } & \$ 30,000 & \$ 2,000 & \$ 28,000 \\\text { Retained Earnings} & 154,000 & 89,000 & 65,000 \\\text { Treasury Stock} & (8,000) & (5,000) & (3,000) \\\text {Total equity} & \$176,000& \$86,000 & \$90,000 \\\hline\end{array}$ Note: Net Income for the year was $89,000.
Based on the above information, calculate the dividends declared during the year 2014.

• A) $3,000
• B) $89,000
• C) $65,000
• D) $24,000

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Definitions:

Voting Trust Agreement

A legal agreement where stockholders transfer their shares to a trustee in exchange for voting trust certificates, allowing the trustee to vote on corporate matters.

Cumulative Voting Agreement

An arrangement that allows shareholders in a company to pool their votes towards electing directors, enhancing the voting power of minority shareholders.

Good Faith

Honesty in fact and observance of reasonable commercial standards of fair dealings in the trade.

Boards of Directors

Groups of elected or appointed members who jointly oversee the activities of a company or organization, making strategic decisions and ensuring legal compliance.