On January 2,2014 the board of directors of Moorehaven Mining Corporation declared a cash dividend of $1,200,000 to stockholders of record on January 18,2014,and payable on February 10,2014.The dividend is permissible by law in Moorehaven's state of incorporation.Selected data from Moorehaven's December 31,2013,balance sheet follow:

The $1,200,000 dividend includes a liquidating dividend of

Question

On January 2,2014 the board of directors of Moorehaven Mining Corporation declared a cash dividend of $1,200,000 to stockholders of record on January 18,2014,and payable on February 10,2014.The dividend is permissible by law in Moorehaven's state of incorporation.Selected data from Moorehaven's December 31,2013,balance sheet follow:

The $1,200,000 dividend includes a liquidating dividend of

Quizplus · Accepted Answer

To determine the liquidating dividend, we need to compare the retained earnings balance before and after the dividend declaration. 
Before the dividend declaration: 
Retained earnings = $20,400,000 
After the dividend declaration: 
Retained earnings = $20,400,000 - $1,200,000 = $19,200,000

Therefore, the company has declared a regular cash dividend of $500,000 ($1,200,000 - $700,000) and a liquidating dividend of $700,000, which reduces the retained earnings to the level just before the company's additional investment.

On January 2,2014 the Board of Directors of Moorehaven Mining