Posted: July 12th, 2016

What is the projected ending retained earning balance of march 31, 2012, assuming that 2010 was their worst year of business?

Smith Jones Market Company has 3,000 shares 9%, $60.00 par cumulative preferred stock outstanding and 4,900 shares of $3.75 par value common stock outstanding. The company began operations on April 1, 2010. The cash dividends declared and paid during each of the first 3 years of Smith Jones marketing operations are shown. Calculate the amounts that went to the preferred and the common shareholders (SHs) each year.

Year Total Dividends Dividends to Dividends to
Ended Paid Preferred SHs Common SHs
March 31, 2010 $10,000
March 31, 2011 $36,000
March 31, 2012 $40,000
Hutch Corporation finished their fiscal year ending March 31, 2010, with $88,000 of net income. They issued dividends of $22,000 at year end. At the end of the year on March 31, 2010, they had a net loss of ($46,000) and did not distribute any dividends. In the fiscal year ending march 31, 2012, their net income was $55,000. What is the projected ending retained earning balance of march 31, 2012, assuming that 2010 was their worst year of business?