Chapter 6
Corporations: Contributed Capital and Dividends
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At the beginning of 2016, Mystery Corporation had the following balances.
Share Capital
Common shares, 1,000,000 shares authorized; 200,000 shares
issued and outstanding
$2,000,000
Retained Earnings
925,000
The following transactions occurred during 2016.
Jan 10 The Board decided to declare $40,000 dividends to common shareholders.
Feb 15 Paid the cash dividend declared on January 10.
Nov 30 Declared a 20% stock dividend. The market value was $12 per share.
Dec 15 Distributed the stock dividend declared on November 30.
Mystery Corporation generated a $250,000 net income during the year. The company uses the
retained earnings method to account for cash and stock dividends.
