Selected information from the company's financial records is presented below:
During 2014, the company sold equipment with a cost of $50,000 and accumulated depreciation of $30,000. A gain of $10,000 was recognized on the sale of the equipment. This was the only equipment sale during the year.
-Refer to Memorial Corporation. Assume that there were no retained earnings transactions other than those dealing with dividends and net income. Dividends declared during 2014 totaled

Question

Selected information from the company's financial records is presented below:
  During 2014, the company sold equipment with a cost of $50,000 and accumulated depreciation of $30,000. A gain of $10,000 was recognized on the sale of the equipment. This was the only equipment sale during the year.
-Refer to Memorial Corporation. Assume that there were no retained earnings transactions other than those dealing with dividends and net income. Dividends declared during 2014 totaled

Quizplus · Accepted Answer

The dividends declared during 2014 can be calculated using the information given in the financial records. Since there were no other retained earnings transactions, the net income for the year can be calculated as follows:
Net income = Gain on sale of equipment - (Cost of equipment - Accumulated depreciation)
= $10,000 - ($50,000 - $30,000)
= $10,000 - $20,000
= -$10,000
This suggests a net loss for the year, which means that dividends cannot be declared. Therefore, the answer is D) $50,000, as no dividends were declared.

Selected Information from the Company's Financial Records Is Presented Below