Question

Now Inc. released its annual results and financial statement. Grace is reading the summary in the business pages of today's paper. In its annual report this year, NOW Inc. reported a net income of $152 million. Last year, the company reported a retained earnings balance of $459 million, whereas this year it increased to $540 million. How much was paid out in dividends this year?
a. $4 million
b. $360 million
c. $71 million
d. $233 million

Answer 1

Answer:

c. $71 million

Explanation:

The net income and dividends are the factors responsible for increase an decrease in retained earnings. Net income is added to the retained earnings balance while dividend is deducted from it.

Given the following information about  NOW Inc,

net income = $152 million

Opening retained earnings balance = $459 million

Closing retained earnings balance = $540 million

$459 million + $152 million - Dividends = $540 million

Dividends = $459 million + $152 million - $540 million

Dividends = $71 million

Option c. $71 million