Question

In its most recent financial statements, Nessler Inc. reported $20 million of net income and $260 million of retained earnings. The previous retained earnings were $250 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

Net Income reported in recent financial statment = $20 million

Retained Earnings reported in recent financial statment = $260 million

Previous years, retained earnings balance = $250 million

Amount accumulated to retained earning from recent Net Income = Recent reported retained earnings - previous years retained earnings

= $260 million - $250 million

= $10 million

So, amount of retained earning of recent finnacial statment is $10 million

- Dividends paid to shareholders = Net income - retained earnings

= $20 million - $10 million

= $10 million

So, the amount of dividends were paid to shareholders during the year is $10,000,000

If you need any clarification, you can ask in comments.     

If you like my answer, then please up-vote as it will be motivating