Revenue for the year $15,000 Total expenses and tax for the year $10,000 Current
ID: 2467314 • Letter: R
Question
Revenue for the year $15,000
Total expenses and tax for the year $10,000
Current assets at year end $ 9,200
Non-current assets at year end $12,750
Investment in fixed assets $ 350
Common stock at the beginning of the year $ 2,000
Retained earnings at the beginning of the year $ 8,850
Total liabilities at year end $ 9,400
What is the amount of dividend declared during the year?
2. The company also has the following annual financial information
Beginning interest payable $100,000
Cash paid for interest $120,000
Ending interest payable $110,000
What is the company’s interest expense during the year?
Explanation / Answer
1. Balance Sheet as at the end of the year:
Increase in retained earnings = $ 10,900 - $ 8,850 = $ 2,050
Net income for the year = Revenue less Expenses = $ 15,000 - $ 10,000 = $ 5,000
Therefore Dividends paid during the year = Net income for the year less earnings retained = $ 5,000 - $ 2,050 = $ 2,950
2. Interest expense during the year:
Beginning interest payable + Interest expense - Interest paid = Ending interest payable
Interest expense = $ 110,000 + 120,000 - 100,000 = $ 130,000
Assets $ Liabilities and equity $ Current assets 9,200 Total liabilities 9,400 Non current assets 12,750 Common stock 2,000 Fixed assets 350 Retained earnings( balancing amount) 10,900 Total assets 22,300 Total liabilities and equity 22,300