Asked by MATTANAPORN CHANTIYANON on May 27, 2024
Verified
How much did Kris pay in dividends to shareholders in Year 2?
A) $30,000
B) $120,000
C) $150,000
D) $330,000
Comparative Balance Sheets
Financial statements that provide a side-by-side comparison of a company’s balance sheets for two or more periods, allowing for analysis of trends over time.
Retained Earnings
The portion of net income that is not distributed to shareholders but instead is reinvested in the business or used to pay off debt.
Net Income
Net income is the total earnings of a company after all expenses and taxes have been deducted from total revenue.
- Calculate dividends paid to shareholders based on changes in retained earnings and net income.
Verified Answer
AN
Andrew NorcrossMay 30, 2024
Final Answer :
A
Explanation :
To calculate dividends paid in Year 2, we start with the change in retained earnings. The retained earnings at the end of Year 1 were $120,000, and at the end of Year 2, they were $240,000. This means the retained earnings increased by $120,000 during Year 2. However, the net income for Year 2 was $150,000. The difference between the net income and the increase in retained earnings represents the dividends paid out. Therefore, dividends paid = Net Income - Increase in Retained Earnings = $150,000 - $120,000 = $30,000.
Learning Objectives
- Calculate dividends paid to shareholders based on changes in retained earnings and net income.