Question

New Orleans Chemicals Company follows the indirect method to prepare its statement of cash flows. Refer to the following portion of the comparative balance​ sheet: New Orleans Chemicals Company Comparative Balance Sheet December​ 31, 2018 and 2017 2018 2017 ​Increase/(Decrease) Common Stock ​$33,000 ​$2,200 ​$30,800 Retained Earnings ​155,000 ​89,000 ​66,000 Treasury Stock ​(​8,100) ​(​5,200) ​(2,900) Total Equity ​$179,900 ​$86,000 ​$93,900 Net Income for 2018 was​ $91,000. Based on the above​ information, determine the amount of dividends declared during 2018.

Answer 1

The dividend amount is $25,000

Step-by-step explanation:

The amount of dividend which is declared during 2018 is computed as:

Dividend = Net Income + Retained Earnings of 2017 - Retained Earnings of 2018

where

Net Income is $91,000

Retained Earnings of 2017 is $89,000

Retained Earnings of 2018 is $155,000

Putting the values in the above:

= $91,000 + $89,000 - $155,000

= $180,000 - $155,000

= $25,000