Question

The owners of Acme Inc pays $1,000 in dividends this accounting period. How does this influence...

The owners of Acme Inc pays $1,000 in dividends this accounting period. How does this influence the level of retained earnings at the end of the accounting period relative to not having paid out any dividends?

Homework Answers

Answer #1

Generally company pays the dividend out of their net profit from the operation. However sometimes if the net profit is not sufficient and the company still wants to give dividend to the shareholders then the company might choose to pay the dividend from the the retained earnings. By doing this the balance of the retained earnings will reduce.

Retained earnings are those which company have earned during his past years have not been distributed as dividend to the shareholders but kept it as their retained earnings so as to use in business operation or any future dividend payout.

Therefore if the dividend paid out of retained earnings it will decrease the retained earning balance at the end of accounting period .

If you find the answer helpful please upvote.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Electronics World Inc. paid out $29.9 million in total common dividends and reported $342.6 million of...
Electronics World Inc. paid out $29.9 million in total common dividends and reported $342.6 million of retained earnings at year-end. The prior year's retained earnings were $250.1 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.
ABC Corporation does have a significant influence over its long term 30% investment in Yazd Corporation....
ABC Corporation does have a significant influence over its long term 30% investment in Yazd Corporation. If Yazd completed a fiscal year profitably but paid no dividends, how these affect the ABC's accounting books? a. Has absolutely no effect on ABC's books b. Decrease book value per share. c. Result in an increased current ratio d. Result in increased earnings per share
How does GDP accounting record the following events? For each of them, describe how they would...
How does GDP accounting record the following events? For each of them, describe how they would be computed in GDP accounts using the income method, the production method and the expenditure method (typing the answer) (a) Panasonic builds a TV which it sells domestically for $500. Panasonic’s only costs were labor costs of $200. b) You purchase a brand new house for $250,000 and live in it for three month,the rental rate to live in a similar house is $1,000...
Apple and Pear, Inc earned $6 EPS and paid out 60% of earnings as dividends this...
Apple and Pear, Inc earned $6 EPS and paid out 60% of earnings as dividends this year. Investors are optimistic about the prospects for Apple and Pear, Inc and are forecasting that dividend would grow over the next 5 years by about 7% a year. After year 5, growth will gradually settle down to a sustainable rate as 3% a year. The require rate of return of Apple and Pear as 6%. What is the current price of Apple and...
Apple and Pear, Inc earned $6 EPS and paid out 60% of earnings as dividends this...
Apple and Pear, Inc earned $6 EPS and paid out 60% of earnings as dividends this year. Investors are optimistic about the prospects for Apple and Pear, Inc and are forecasting that dividend would grow over the next 5 years by about 7% a year. After year 5, growth will gradually settle down to a sustainable rate as 3% a year. The require rate of return of Apple and Pear as 6%. What is the current price of Apple and...
Accounting for Investments Using the Cost and Equity Methods On 1/1/x1, Omega Corporation’s net worth was...
Accounting for Investments Using the Cost and Equity Methods On 1/1/x1, Omega Corporation’s net worth was as follows: Common stock (15,000 shares, $10 par value)                                             $150,000 Additional paid-in capital                                                                             30,000 Retained Earnings                                                                                          60,000                 Total                                                                                                          $240,000            On 1/1/14, Alpha, Inc. purchased 3,000 shares of Omega Corporation at a price of $29 per share. Omega Corporation’s equity securities are not readily marketable. Alpha could not attribute any of the excess cost over book value to any...
MC Qu. 70 At the end of the accounting... At the end of the accounting period,...
MC Qu. 70 At the end of the accounting... At the end of the accounting period, the owners of debt securities: Multiple Choice -Must retire the debt. -Must report the dividend income accrued on the debt securities. -Must record any interest earned on the debt securities during the period. -Must record a gain or loss on the interest income earned. -Must record a gain or loss on the dividend income earned. MC Qu. 133 On November 12, Higgins... On November...
Saturn, Inc. paid $ 5,000 on accounts payable. How does this transaction affect the accounting equation...
Saturn, Inc. paid $ 5,000 on accounts payable. How does this transaction affect the accounting equation of​ Saturn? A. assets decrease by $5,000 and equity increases by $5,000 B. assets decrease by $5,000 and liabilities decrease by $5,000 C. assets increase by $5,000 and liabilities increases by $5,000 D. assets increase by $5,000 and equity decreases by $5,000
Ryan Hope, controller of Hope, Inc. provides you with the following information concerning all transactions during...
Ryan Hope, controller of Hope, Inc. provides you with the following information concerning all transactions during 2009. Hope, Inc. began operations on January 1, 2009. 1. Issued 1,000 shares of common stock at $95 per share. 2. Paid $2,600 every month to rent office and warehouse space. Rent was paid on the last day of each month. 3. Made total sales for services of $190,000: $65,000 for cash and $125,000 on account. 4. Purchased land for $32,000 in cash. 5....
7 20. In the _______ practice of accounting, the accounting concepts are required to guide the...
7 20. In the _______ practice of accounting, the accounting concepts are required to guide the existing practice of accounting, prescribe future directions in accounting, and identify certain fundamental accounting issues. a) Islamic b) conventional c) contemporary d) all of the above 21. Which one of the following countries does not require Islamic financial institutions in their respective jurisdictions to abide by the AAOIFI reporting standards? a) Bahrain b) Jordan c) United Arab Emiratis d) Sudan 22. The ____________ is...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT