On 12/31/09, Heaton Industries Inc. reported retained earnings of $675,000 on its balance sheet, and it reported that it had $172,500 of net income during the year. On its previous balance sheet, at 12/31/08, the company had reported $555,000 of retained earnings. No shares were repurchased during 2009. How much in dividends did Heaton pay during 2009?

Question

Quizplus · Accepted Answer

Retained earnings = Beginning retained earnings + Net income - Dividends
Using the information given in the problem, we can solve for dividends:
$675,000 = $555,000 + $172,500 - Dividends
Dividends = $52,500