Question

Zwick Company bought 21,500 shares of the voting common stock of Handy Corporation in January 2018. In December, Handy announced $201,500 net income for 2018 and declared and paid a cash dividend of $3 per share on all 203,500 shares of its outstanding common stock. Zwick Company's dividend revenue from Handy Corporation in December 2018 would be:

Answer 1

Answer:

$64,500

Explanation:

Shareholders are entitled to returns they have made in companies  through dividends

Zwick Company is a shareholder in Handy Corporation and hence also received its dividends returns amongst other Zwick Company investors.

Zwick Company's dividend revenue will be calculated as :

Dividend Revenue = Dividend Payout Ratio × Number of Share held on date of announcement

                               = $3 × 21,500 shares

                               = $64,500

Therefore, Zwick Company's dividend revenue from Handy Corporation in December 2018 would be $64,500