Worldwide Widget Manufacturing Inc Statement of Retained Ear

Worldwide Widget Manufacturing, Inc. Statement of Retained Earnings as of December 31, 2015 (in millions of dollars) Balance of retained earnings, December 31, 2014 Plus: Net income for 2015 Preferred stock Common stock Total cash dividends paid Balance of retained earnings, December 31, 2015 $1,142 w. ? x. ? 219 317 $1,489 w. Plus: Net income for 2015 x. Preferred stock

Solution

Opening Balance of retained earnings = $1,142

Closing Balance of Retained Earnings = $1,489

w. Net income for 2015 = Closing Balance of Retained earnings + Cash Dividends paid - Opening Balance of retained earnings

Net income for 2015 = $1,489 + $317 - $1,142 = $664

Tehrefore Net income for 2015 = $664

x. Preferred stock Dividend

As per the question, Total dividends paid during the year is $317

Out of which Equity Dividend paid is given $219

So the remaining balance of dividend belongs to the preference dividend

Preference Dividend = $317 - $219 = $98 (Answer)