Question

Bagwell's net income for the year ended December 31, Year 2 was $175,000. Information from Bagwell's comparative balance sheets is given below. Compute the cash paid for dividends during Year 2.

Answer 1

Solution:

The cash dividend is cash or assets generally paid into the current income  of the company to the shareholders. All dividends are to be declared by the executive board and whether the payment for the dividend should remain identical.

Ending Retained Earnings= Beginning Retained Earnings + Net Income - Dividends

    ( Beginning and Ending Retained Earnings are given in question )

     $688,000                    = $582,000 + $175,000 - Dividends

     $688,000                    = $757,000 - Dividends

     Dividends                    = $757,000 - $688,000

     Dividends                    = $69,000