Question

The year-end 2013 balance sheet of Brandex Inc. listed common stock and other paid-in capital at $2,600,000 and retained earnings at $4,900,000. The next year, retained earnings were listed at $5,200,000. The firm’s net income in 2014 was $1,050,000. There were no stock repurchases during the year. What were the dividends paid by the firm in 2014?

Answer 1

Answer: Dividend paid = $750,000

Step-by-step explanation:

In order to compute the dividends paid by the firm in 2014 , we'll use the following formula :

Retained earning at end = Retained earning at beginning +Net income -Dividend paid

$5,200,000 = $4,900,000 + $1,050,000 - Dividend paid

Dividend paid = $4,900,000 + $1,050,000 - $5,200,000

Dividend paid = $750,000