The shareholders' equity section of Time Company's comparative balance sheets for the years ended December 31, 2018 and 2017, reported the following data: During 2018, Time declared and paid cash dividends of $90 million. The company also declared and issued a stock dividend. No other changes occurred in shares outstanding during 2018. What was Time's net income for 2018?
A) $28 million
B) $118 million
C) $130 million
D) $178 million

Question

The shareholders' equity section of Time Company's comparative balance sheets for the years ended December 31, 2018 and 2017, reported the following data:  During 2018, Time declared and paid cash dividends of $90 million. The company also declared and issued a stock dividend. No other changes occurred in shares outstanding during 2018. What was Time's net income for 2018?
A) $28 million 
B) $118 million 
C) $130 million 
D) $178 million

Quizplus · Accepted Answer

The beginning balance in retained earnings ($600) + net income (?) - cash dividends ($90) - the amount debited for the stock dividend [$612 - 600 = $12 (common stock) + $348 - 300 = $48 (paid-in capital-excess of par)] = ending balance in retained earnings ($628). Net income = $178.

The Shareholders' Equity Section of Time Company's Comparative Balance Sheets