Question

You are given the following information for Company ABC as of December 31, 2016:

Capital Stock, $1,000,000 ($1 par)

Paid-In Capital in Excess of Par Value—Common, $4,000,000

Retained Earnings Balance on January 1, 2016, $400,000

Retained Earnings Balance on December 31, 2016, $300,000

Dividends declared and paid in 2016: $1,100,000

What was the company's net income for 2016?

Select one:

a. $1,200,000

b. $100,000

c. $0

d. None of the above

How many shares of stock are issued and outstanding?

Select one:

a. 4,000,000

b. 5,000,000

c. 1,000,000

d. None of the above

Answer 1

Ans.	Company Net Income for 2016:
	Particulars				Amt.($)
	Retained Earning balance on December 31, 2016				300,000
	Add: Dividend Paid in 2016				1,100,000
					1,400,000
	Less: Retained Earning balance on January 1, 2016				400,000
	Net Income				$          1,000,000
	d) None of the above.
Ans.	Shares of Stock Issued and Outstanding:
	No. of Shares =		Value of Stock / Par value
	=		$1,000,000 / $1
	=		1,000,000