Question

At October 1, Arcade Fire Enterprises reported stockholders' equity of $36,000. During October, no stock was issued and the company posted a net income of $4,000. If stockholders' equity at October 31 totals $32,000, what amount of dividends were paid during the month? A. $8,000 B. $2,000 C. $0 D. $4,000

Answer 1

A. $8,000

Step-by-step explanation:

Stockholders Equity Includes the Add-in-capital par value, Add-in-capital excess value of Common and Preferred, Net income accumulated value and dividends.

Ending Stockholders Equity = Beginning Stockholders Equity + Income for the period - Dividend paid During the period

$32,000 = $36,000 + $4,000 - Dividend paid During the period

$32,000 = $40,000 - Dividend paid During the period

Dividend paid During the period = $40,000 - $32,000

Dividend paid During the period = $8,000