11) Dale Murphy Company had beginning retained earnings of $60,000. During the year the company had net income of $20,000, and paid dividends of $7,500. The Company repurchased 1,000 shares of its stock for $45 during the period. What is the net effect of these transactions on the items shown below?
A) increase Retained earnings; increase Total shareholders’ equity
B) increase Retained earnings; decrease Total shareholders’ equity
C) decrease Retained earnings; increase Total shareholders’ equity
D) decrease Retained earnings; decrease Total shareholders’ equity
12) Which of the following will
increase
a company’s retained earnings?
A) earning net income of $50,000 for the year
B) issuing additional shares of common stock at a price above par
C) buying additional shares of treasury stock
D) declaring cash dividends of $0.50 per share
13) Which of the following will
decrease
a company’s retained earnings?
A) earning net income of $50,000 for the year
B) issuing additional shares of common stock at a price above par
C) buying additional shares of treasury stock
D) declaring cash dividends of $0.50 per share
14) Use the following information obtained from the company’s computerized accounting information system to answer the question(s) below. Note: There were no preferred shares outstanding and no additional common shares were issued in 2011.
|
2011
|
2010
|
Net income
|
20,000
|
26,000
|
Total assets
|
169,000
|
150,000
|
Total liabilities
|
94,000
|
90,000
|
Total shareholders’ equity
|
75,000
|
60,000
|
Common shares outstanding
|
10,000 shares
|
10,000 shares
|
Dividends declared in 2011 equal ________.
A) $0
B) $5,000
C) $6,000
D) an amount that cannot be determined from the information given
15) Retained earnings includes the earnings kept by a company since the day it began.
16) Retained earnings is also known as paid-in capital.
17) Retained earnings is also known as earned capital.