A Company Has 5,000 Shares of $1 Par Value Common

question 150

Multiple Choice

A company has 5,000 shares of $1 par value common stock and 6,000 shares of 2%,$98 par,noncumulative preferred stock outstanding.The balance in Retained Earnings at the beginning of the year was $750,000.Net income for the current year was $400,000.If the company paid a dividend of $3 per share on its common stock,what is the balance in Retained Earnings at the end of the year?

• A)$1,123,240
• B)$1,135,000
• C)$1,150,000
• D)$735,000
• E)$723,240

---

Definitions:

Norms

Standards established by society to tell its members what types of behavior are typical or expected.

Standards

Accepted or agreed-upon criteria or levels of quality that serve as measures for comparison or guidelines.

Society

A group of individuals living together in a more or less ordered community, sharing customs, laws, and organization.

Reciprocity

A social norm of responding to a positive action with another positive action, fostering mutual benefit and cooperation.