The following information pertains to Diane Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit.
What are the dividends per common share for Diane Company?
A) $20.00
B) $3.00
C) $0.67
D) $1.50

Question

The following information pertains to Diane Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit.    
What are the dividends per common share for Diane Company?
A) $20.00 
B) $3.00 
C) $0.67 
D) $1.50

Quizplus · Accepted Answer

The dividends per common share can be calculated using the dividend per share formula: 
Dividends per common share = Total dividends / Number of common shares outstanding
Total dividends = Net income - Increase in retained earnings 
= $31,000 - ($75,000 - $60,000) 
= $16,000

Number of common shares outstanding = Total common stock / Par value per share 
= $150,000 / $10 
= 15,000 shares

Dividends per common share = $16,000 / 15,000 
= $1.50 per share

The Following Information Pertains to Diane Company