Question

In its most recent financial statements, Del-Castillo Inc. reported $30 million of net income and $970 million of retained earnings. The previous retained earnings were $961 million. How much in dividends did the firm pay to shareholders during the year?

Answer 1

Del-Castillo Inc. paid dividends of $21 million to shareholders during the year, which is found by subtracting the increase in retained earnings from the net income.

Step-by-step explanation:

For Del-Castillo Inc., the amount of dividends paid to shareholders can be calculated using the net income and the change in retained earnings. The net income is the profit the company has made during the year, while retained earnings are the cumulative amount of net income that has been retained (not paid out as dividends) by the company over time.

To calculate the dividends paid over the last year, we can use the following formula:

Dividends Paid = Net Income - (Retained Earnings at the End of Period - Retained Earnings at the Beginning of Period)

Given the information:

• Net Income = $30 million
• Retained Earnings at the End of Period = $970 million
• Retained Earnings at the Beginning of Period = $961 million

Now, we substitute the numbers into the formula:

Dividends Paid = $30 million - ($970 million - $961 million)

Dividends Paid = $30 million - $9 million

Dividends Paid = $21 million

Therefore, Del-Castillo Inc. paid $21 million in dividends to its shareholders during the year.