Question

Cash dividends of $45,000 were declared during the year. Cash dividends payable were $10,000 at the beginning of the year and $15,000 at the end of the year. The amount of cash for the payment of dividends during the year is

a. $50,000
b. $40,000
c. $55,000
d. $35,000

Answer 1

The amount of cash paid for dividends during the year is calculated by adding the beginning dividends payable to the declared dividends and then subtracting the ending dividends payable. The answer is $40,000.

Step-by-step explanation:

The student's question pertains to the amount of cash paid for dividends during the year. To determine this, we need to look at the declared dividends and the changes in dividends payable over the year. The company declared $45,000 in cash dividends during the year, had $10,000 in dividends payable at the beginning of the year, and $15,000 in dividends payable at the end of the year. To find the cash paid for dividends, you would add the beginning dividends payable to the declared dividends and subtract the ending dividends payable. This results in:

Beginning Dividends Payable ($10,000) + Declared Dividends ($45,000) - Ending Dividends Payable ($15,000) = $40,000 cash paid.

The correct answer is b. $40,000