Puppet Corporation began with an investment by shareholders of $20,000. a. In its first year its income

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Puppet Corporation began with an investment by shareholders of $20,000.
a. In its first year its income earned $2,000. What would the equity section of its balance sheet show?
b. In the second year it had income of $9,000 and a dividend of $3,000 was paid. What would the equity section of its balance sheet show?

c. In the third year, Puppet sold more shares for a value of $10,000, earned income of $5,000 and paid a dividend of $2,500. What would the equity section of its balance sheet show?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Foundations of Financial Management

ISBN: 978-1259024979

10th Canadian edition

Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta

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