Question

Electronics World Inc. paid out $21.5 million in total common dividends and reported $175.1 million of retained earnings at year-end. The prior year's retained earnings were $143.6 million. What was the net income? Assume that all dividends declared were actually paid. Write out your answer completely. For example, 25 million should be entered as 25,000,000. Round your answer to the nearest dollar, if necessary.

In its most recent financial statements, Nessler Inc. reported $40 million of net income and $480 million of retained earnings. The previous retained earnings were $451 million. How much in dividends were paid to shareholders during the year? Assume that all dividends declared were actually paid. Write out your answer completely. For example, 25 million should be entered as 25,000,000. Round your answer to the nearest dollar, if necessary.

Answer 1

(1)

Given

Dividend paid = 21,500,000 $

Retained earnings till last year = 143,600,000$

Total Retained Earnings till present year end= 175,100,000$

Current year part of net income that has been formed part of retained earnings

= Total Retained Earnings till present year end - Retained earnings till last year

= 175,100,000 - 143,600,000

= 31,500,000$

Net income = Dividend paid + Current year part of net income that has been formed part of retained earnings

= 21,500,000 + 31,500,000

= 53,000,000$

(2)

Given

Net Income = 40,000,000$

Total Retained Earnings till present year end= 480,000,000$

Retained earnings till last year = 451,000,000$

Current year part of net income that has been formed part of retained earnings

= Total Retained Earnings till present year end - Retained earnings till last year

= 480,000,000 - 451,000,000

= 29,000,000$

Dividend paid in current year

= Net Income - Current year part of net income that has been formed part of retained earnings

= 40,000,000 - 29,000,000

= 11,000,000 $