Question

Beta Corporation has the following shareholders’ equity accounts
Common stock at par ........... $ 5,000,000
Paid-in capital in excess of par ....... 2,000,000
Retained earnings ............ 25,000,000
Total stockholders’ equity ........... $32,000,000
a. What is the maximum amount that Beta Corporation can pay in cash dividends, without impairing its legal capital, if it is headquartered in a U.S. state where capital is defined as the par value of common stock?
b. What is the maximum amount that Beta Corporation can pay in cash dividends without impairing its legal capital if it is headquartered in a U.S. state where capital is defined as the par value of common stock plus paid-in capital in excess of par?


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  • CreatedMarch 26, 2015
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