M11-7 Determining the Amount of a Dividend [LO 11-3] Netpass Company has 100,000

Question

M11-7 Determining the Amount of a Dividend [LO 11-3]

Netpass Company has 100,000 shares of common stock authorized, 80,000 shares issued, and 45,000 shares of treasury stock. The company’s board of directors declares a dividend of $2.80 per share of common stock. What is the total amount of the dividend that will be paid?

References

Netpass Company has 100,000 shares of common stock authorized, 80,000 shares issued, and 45,000 shares of treasury stock. The company’s board of directors declares a dividend of $2.80 per share of common stock. What is the total amount of the dividend that will be paid?

Explanation / Answer

Shares outstanding=Shares issued-Treasury stock

=(80000-45000)=35000 shares

Hence total dividend paid=Shares outstanding*$2.8 per share

=(35000*2.8)

=$98000

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