QUESTION 2 (Points: 10)

2. Assume that when you were in high school you saved $1,000 to invest for your college education. You purchased 200 shares of Smiley Incorporated, a small but growing company. Over the three years that you have owned the stock, the corporation's board of directors has taken the following actions:

• Declared a 2-for-1 stock split.

• Declared a 20 percent stock dividend.

• Declared a 3-for-1 stock split.

  The current price of the stock is $12 per share.

1. 2.1. Calculate the current number of shares and the market value of your investment.

2. 2.2. Explain the likely reason the board of directors of the company has not declared a cash dividend.

QUESTION 3 (Points 15)

3. Spark INC., had retained earnings at the beginning of the current year of $460,000. During the year the company earned net income of $250,000 and declared dividends as follows:

3.1.

$1 per share for the current-year dividend on the 10,000 shares of preferred stock outstanding. $1 per share for the dividend in arrears for one year on the 10,000 shares of preferred stock outstanding. $0.50 per share for the current-year dividend on the 200,000 shares of common stock outstanding. In addition, the company discovered an overstatement in the prior year's net income of $65,000 and corrected that error in the current year. Prepare a statement of retained earnings for the year ended 2019 and also Write a short report on your findings.

QUESTION 4 (Points 10)

4. At the beginning of the current year, Spark INC. had dividends payable of $1,600,000. During the current year, the company declared cash dividends of $4,500,000, of which $970,000 appeared as a liability at year-end.

4.1. Determine the amount of cash dividends paid during this year.