How much were Superior's dividend declarations during its recent year of operation?

A) $10,000.
B) $42,000.
C) $26,000.
D) The dividend declarations cannot be determined from the information provided.

Question

How much were Superior's dividend declarations during its recent year of operation?A) $10,000.B) $42,000.C) $26,000.D) The dividend declarations cannot be determined from the information provided.

Tayler Bedard · Accepted Answer

Final Answer : A, Explanation :  Dividends = (Ending Retained Earnings - Beginning Retained Earnings + Net Income) - Additional Paid-in CapitalDividends = ($91,000 - $75,000 + $26,000) - $2,500Dividends = $40,500 - $2,500Dividends = $38,000However, dividends cannot exceed the amount of retained earnings available at the beginning of the year, which is $75,000. Therefore, the maximum amount of dividends that can be declared is $75,000 - $25,000 (ending common stock balance) = $50,000. Since $38,000 is less than $50,000, the answer is A) $10,000.

How much were Superior's dividend declarations during its recent year of operation?

A) $10,000.
B) $42,000.
C) $26,000.
D) The dividend declarations cannot be determined from the information provided.

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