Question

The following information pertains to Alpha Computing at the end of 2015:

Assets $980,000
Liabilities $437,500
Net Income $242,500
Common Stock $395,000


Alpha Computing's Retained Earnings account had a zero balance at the beginning of 2015.
What amount of dividends did the company pay in 2015?

Answer 1

The amount of dividends the company paid in 2015 is $95000.

Step-by-step explanation:

Dividends is paid from the net income of the company and the net income includes retained earnings balance at the end of each financial year.

Assers = stockholders equity(stock + retained earnings) + liabilities

$980,000 = $395,000 + retained earnings + $437,500

retained earnings = $147500

net income = dividends + retained earnings

dividends = net income - retained earnings

= $242,500 - $147500

= $95000

Therefore, the amount of dividends the company paid in 2015 is $95000.