Question

Nina Corp. had the following net income (loss) the first three years of operation: $6,700, ($1,200), and $3,800. If the Retained Earnings balance at the end of year three is $700, what was the total amount of dividends paid over these three years?

Answer 1

Answer:

The total amount of dividends paid over these three years is $8,600

Explanation:

The computation of the total amount of dividend for three years is shown below:

= Net income for first-year - net loss for the second year + net loss for the third year - ending retained earning balance

= $6,700 - $1,200 + $3,800 - $700

= $8,600

As we know,  

The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid

So, we apply the same formula to compute the dividend amount