Question

In its most recent financial statements, Nessler Inc. reported $20 million of net income and $220 million of retained earnings. The previous retained earnings were $211 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

Solution :-

Net income = $20 million

Retained earnings ,this year = $220 million

Retained earnings , previous year = $211 million

So, firstly we will calculate Addition to Retained Earnings .

Addition to Retained Earnings :-

= Retained Earnings this year - Retained Earnings previous year

= $220 million - $211 million

= $9 million

Now, we will calculate dividend paid .

Dividend paid :-

= Net income - Addition to retained earnings

= $20 million - $9 million

= $11 million

Or $11,000,000

So, Dividend paid is $11,000,000