At October 1, Smithson Enterprises reported equity of $210,000. During October, no capital shares were issued and the company earned net income of $24,000. If equity at October 31 totals $192,000, what amount of dividends were paid during the month?

Question

Quizplus · Accepted Answer

The decrease in equity from $210,000 to $192,000 is $18,000. Since the company earned $24,000 in net income, the dividends paid must have been $24,000 (net income) + $18,000 (decrease in equity) = $42,000.

At October 1, Smithson Enterprises Reported Equity of $210,000