Question

Over the first four years of a company's life, it earned the following net income (loss): $10,000; $5,000; $6,000, and ($4,000). If the company's ending retained earnings is $14,200 after year 4, what is the average amount of dividends paid per year?

Answer 1

$700

Step-by-step explanation:

Total earnings in 4 years

= 10000 + 5000 + 6000 - 4000

= $17,000

Ending retained earnings after 4 years

= $14,200

Total amount paid out as dividend in 4 years

= 17000 - 14200

= $2,800

Average amount of dividends paid per year

= $2,800/4

= $700