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STATEMENT OF STOCKHOLDERS' EQUITY In its most recent financial statements, Newhouse Inc. reported $60 million of...
STATEMENT OF STOCKHOLDERS' EQUITY In its most recent financial statements, Newhouse Inc. reported $60 million of net income and $840 million of retained earnings. The previous retained earnings were $790 million. How much in dividends were paid to shareholders during the year? Assume that all dividends declared were actually paid.
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Expert Solution
Given:
Net Income = $ 60 million
Opening retained earnings for recent year = $ 790 million (this is equal to closing of previous year)
Closing retained earnings for recent year = $ 840 million
Change in retained earnings = Closing – opening retained earnings
= $ 840 million - $ 790 million
= $ 50 million
Retained earnings has increased by $ 50 million.
Dividend payment during the year = Net Income – Increase in retained earnings
= $ 60 million - $ 50 million
= $ 10 million
Hence, dividends of $ 10 million paid to shareholders during the year.
Concept: Dividend is paid out of net income and rest is transferred to retained earnings. Here, out of net income of $ 60 million, $ 10 million is paid as dividend and $ 50 million goes to retained earnings.
jeff jeffy answered 1 year agoRelated Solutions
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