Frost Company reported a $4,000 increase in Ddividends Ppayable,a $60,000 increase in Rretained Eearnings,and $64,000 in net income for 2014during the year.Based on this information,the company must have paid dividends equal to $4,000 during 2014the year.

Question

Quizplus · Accepted Answer

The increase in retained earnings is the net income minus dividends paid. If retained earnings increased by $60,000 and net income was $64,000, then dividends paid must have been $4,000, not considering the increase in dividends payable. The increase in dividends payable indicates that not all dividends declared were paid, so the actual dividends paid would be less than $4,000.

Frost Company Reported a $4,000 Increase in Ddividends Ppayable,a $60,000