Information from the financial records is presented in the following table:
Retained earnings, December 31, 2014 | $400,000 |
Retained earnings, December 31, 2013 | 250,000 |
Dividends payable, December 31, 2014 | 20,000 |
Dividends payable, December 31, 2013 | 30,000 |
Net income for 2014 | 200,000 |
There were no retained earnings transactions other than those dealing with dividends and net income. What were total dividends declared during 2014?
How much cash was paid for dividends during 2014?
Answer: Amount of dividend declared in 2014= $50000
Calculation of dividend decleared in 2014:-
= Opening of Retained Earning + Net Income for 2014 - Closing of Retained Earnings.
= $250000+$200000-$400000
= $50000
Assuming dividend of already being asjusted in Closing balalnce of retained earning of 2013 & 2014
Amount of Cash Paid for Dividend During 2014 = $60000
Calculation of cash paid for dividend in 2014:-
= Dividend Payable of 2013 + [Dividend declared of 2014 - Dividend Payable of 2014]
= $30000 + ($50000-$20000)
= $30000+$30000
= $60000
Hope this meets your purpose. Do let me know in case of any clarification.
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