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Question(s) / Instruction(s):

Fella Corporation has outstanding 50,000 shares of $1 par value common stock as well as 10,000 shares of 6%, $100 par value cumulative preferred stock. At the beginning of the year, the balance in retained earnings was $500,000, and one years dividends were in arrears. Net income for the current year is $260,000. Compute the balance in retained earnings at the end of the year if Fella Corporation pays a dividend of $2 per share on its common stock this year.

 

A.      $660,000

 

B.      $760,000

 

C.      $600,000

 

D.      $540,000

 

 

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