Superior has provided the following information for its recent year of operation:
The common stock account balance at the beginning of the year was $13,000 and the year-end balance was $16,500.

The additional paid-in capital account balance increased $3,800 during the year.
The retained earnings balance at the beginning of the year was $75,000 and the year-end balance was $92,000.

Net income was $39,000.
How much were Superior's dividend declarations during its recent year of operation?
A. $39,000.

B. $56,000.

C. The dividend declarations can not be determined given the above information.

D. $22,000.

Superior's dividend declarations during its recent year of operation is $22,000

Explanation:

Superior's dividend declarations would be the difference between what the Business generated in Net Income and what was transferred to Retained earnings for the year.

Statement of Retained Earnings.

Opening Retained Earnings = $75,000

Closing Retained Earnings = $92,000

Addition to Retained Earnings = $17,000

This implies:

a. of the Net Income for the year = $39,000

b. Transferred to Retained Earnings = $17,000

Dividend Paid therefore is = $22,000 (a minus b)

And the Shareholders Equity Position would be:

Opening common stock Account = $13,000

Additional Paid in Capital = $3,500 (Closing Balance less Opening)

Premium on Paid up Capital = $300 ($3,800 less $3,500 = $300)

Retained earnings = $92,000

Total Shareholders Equity = $108,800