Answer:
The total amount of dividends paid over these three years: $8000
Explanation:
$7,100, ($1,600), and $3,600
=> the total net income is the first three years of operation is:
$7,100 - ($1,600) + $3,600
= $9,100
This money is not kept in the Retained Earnings because it is used for dividend payment. But Earnings balance at the end of year three is $1,100, so the total amount of dividends paid over these three years:
= Total net incomes - Retained Earnings
= $9,100 - $1,100,
= $8000
Hope it will find you well.
Answer:
Total amount of dividends paid over these three years is equal to the values of accumulated net income or losses less the balance of Retained Earnings.
This value is $7,400 (7,100+3,000-1,600) - 1,100.
Explanation:
Retained Earnings are the total amounts from net income or loss that are not distributed to stockholders. They are usually re-invested in the company to earn more income.
The allocation of surplus income between retained earnings and dividends is one of the decisions that a company makes to balance stockholders' expectation for immediate returns and long-term growth of their investments. It is a very delicate decision that must be taken to meet the varying expectations of stockholders.
