At October 1, Arcade Fire Enterprises reported stockholders' equity of $70,000.During October, common stock of $10,000 was issued and the company posted a net loss of $4,000.If stockholders' equity at October 31 totals $70,000, what amount of dividends were paid during the month?

Question

Quizplus · Accepted Answer

The stockholders' equity remained the same at the beginning and the end of October ($70,000), despite issuing $10,000 in common stock and incurring a net loss of $4,000. This means dividends paid out must have reduced the equity increase from the stock issuance. The calculation is $10,000 (stock issued) - $4,000 (net loss) = $6,000, which must have been paid out as dividends to keep the equity constant.

At October 1, Arcade Fire Enterprises Reported Stockholders' Equity of $70,000.During