Frost Company reported a $4,000 increase in dividends payable,a $60,000 increase in retained earnings,and $64,000 in net income during the year.Based on this information,the company must have paid dividends equal to $4,000 during the year.

Question

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The increase in dividends payable indicates that the company declared more dividends than it paid. To find the dividends paid, you subtract the increase in retained earnings from the net income ($64,000 - $60,000 = $4,000), but this does not account for the increase in dividends payable, which suggests that the actual dividends declared were higher.

Frost Company Reported a $4,000 Increase in Dividends Payable,a $60,000