On 12/31/11, Hite Industries reported retained earnings of $525,000 on its balance sheet, and it reported that it had $135,000 of net income during the year. On its previous balance sheet, at 12/31/10, the company had reported $445,000 of retained earnings. No shares were repurchased during 2011. How much in dividends did the firm pay during 2011?

Question

Quizplus · Accepted Answer

The dividends paid can be calculated by taking the difference in retained earnings from 2010 to 2011 and subtracting the net income for 2011: $525,000 - $445,000 = $80,000 increase in retained earnings. Then, $135,000 (net income) - $80,000 (increase in retained earnings) = $55,000 in dividends paid.

On 12/31/11, Hite Industries Reported Retained Earnings of $525,000 on Its