Calculation of Retained Earnings For The Given Year


1. True or False: Taylor Inc recently repurchased 5.6 million shares of common stock at a price of $43 per share. One plausible reason for this is that the company feels that its stock is overvalued at the current market price.

2. The stockholders’ equity of Taylor Inc. at December 31, 2011, appears below:

Common stock, $16 par value, 200,000 shares authorized,120,000 shares issued and outstanding


Paid-in capital in excess of par value


Retained earnings


During 2012, the following transactions occurred:

June 15:     Declared a 10% common stock dividend when market value was $30 per share
June 30:     Issued the stock dividend declared on June 15.
August 15:    Issued and sold 10,000 shares of common stock for $20 a share.
December 10:     Declared and paid a cash dividend of $3.00 per share.
December 31:     Recognized net income of $ 752,000.

Compute the year-end balance of the retained earnings for 2012.


These short answer questions belong to Finance. The 1st question is a true or false statement and the 2nd question is about calculating the retained earnings for the year.

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