The shareholders\' equity section of Time Company\'s comparative balance sheets

Question

The shareholders' equity section of Time Company's comparative balance sheets for the years ended December 31, 2016 and 2015, reported the following data:

During 2016, 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 2016. What was Time's net income for 2016?

$28 million

$118 million

$130 million

$178 million

($ in millions) 2016 2015 Common stock, $1 par per share $612 $600 Paid-in capital - excess of par 348 300 Retained earnings 628 600

Explanation / Answer

Time,s net income for 2016=

Closing Balance of retained Earning= 628

(+) Cash Dividend Paid = 90

(+) bonus share issue(12+48) = 60

(-) Opening Balance of Retained Earning=620

Net Income=$178millon

Notes:

Shares are issued for 12million + increase in premium by 48million all would be transfered from profits.

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