Question

Fashion, Inc. had a Retained Earnings balance of $10,000 at December 31, 2018. The company had an average annual income of $6,000 over the next 3 years, and an ending Retained Earnings balance of $13,000 at December 31, 2021. What was the total amount of dividends paid over the last three years?

Answer 1

Total Dividend = $20000

Step-by-step explanation:

Total Income for 3 Years = 3*Average income

= 3* 6000 = $18000

Opening Retained Earnings $10,000

Closing Retained Earnings $13,000

Net Utilisation for Dividend = 13000 - 10000 = $2000

Total Dividend =Total Income+Net utilisation from RE

=18000 + 2000 = $20000