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Distributing Corporate Earnings During its first year of operation, Longhorn Corporation

ISBN: 9780078688294 416

Solution for problem 21-2 Chapter 21

Accounting: First Year Course | 1st Edition

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Problem 21-2

Distributing Corporate Earnings During its first year of operation, Longhorn Corporation issued 17,500 shares of $10 par common stock. At the end of the year, the corporation had a net income of$350,000. The board of directors declared a cash dividend of $5 per share. Instructions Answer these questions in your working papers. 1.) How much of the net income did Longhorn distribute to the stockholders? 2.) How much of the net income did the corporation retain? Step-by-Step Solution: Problem 21-2 Distributing Corporate Earnings During its first year of operation, Longhorn Corporation issued 17,500 shares of$10 par common stock. At the end of the year, the corporation had a net income of $350,000. The board of directors declared a cash dividend of$5 per share. Instructions Answer these questions in your working papers. 1.) How much of the net income did Longhorn distribute to the stockholders? 2.) How much of the net income did the corporation retain?

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Step 1 of 3

Net income is described as the net earnings left with the corporation after the payment of expenses in order to generate revenues. The net income earned by the corporation is added to the retained earnings.

Step 2 of 3

Step 3 of 3

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