Question

If the Retained Earnings balance at the end of year three is $1,000, what was the total amount of dividends paid over these three years

Answer 1

With the provided information, it's not possible to determine the total amount of dividends paid over the three years as the initial Retained Earnings balance and net income for each year are required but not provided.

Step-by-step explanation:

The student's question concerning the Retained Earnings balance at the end of year three cannot be answered with the information provided. The data necessary to calculate the total amount of dividends paid over three years would include the initial Retained Earnings balance, net income for each year, and any other transactions affecting Retained Earnings. Since this information is not provided, we cannot determine the total dividends paid.

Answer 2

The total amount of dividends paid over these three years is $8,000

Total Income earned over the three years:

= $7,000 - $1,600 + $3,600

= $9000

Dividend = Total annual income - Change in retained earnings

= $9,000 - $1,000

= $8,000.

Full question:

ABC had the following net income (loss) the first three years of operation: $7,000, ($1,600), and $3,600. If the Retained Earnings balance at the end of year three is $1,000, what was the total amount of dividends paid over these three years?