Beard Marine
The company reported the following information for the year ended December 31, Year 1:
$$\begin{array} { l r }
\text { Net income } & \$ 100,000 \
\text { Dividends } & 6,000 \
\text { Retained earnings at December 31, Year 1 } & 120,000
\end{array}$$
-Refer to the figure Beard Marine.What was the economic effect of the dividend payment?

Question

Beard Marine
The company reported the following information for the year ended December 31, Year 1:
 $$\begin{array} { l r } 
\text { Net income } & \$ 100,000 \
\text { Dividends } & 6,000 \
\text { Retained earnings at December 31, Year 1 } & 120,000
\end{array}$$
-Refer to the figure Beard Marine.What was the economic effect of the dividend payment?

Quizplus · Accepted Answer

Payment of dividends reduces the amount of retained earnings, which is a part of stockholders' equity. Therefore, the economic effect of the dividend payment was that it reduced total retained earnings.

Beard Marine the Company Reported the Following Information for the Year

Beard Marine
the Company Reported the Following Information for the Year