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

Quizplus · Accepted Answer

The increase in Dividends Payable suggests that dividends declared exceeded dividends paid. The $60,000 increase in Retained Earnings, combined with $64,000 in net income, implies that $4,000 was declared as dividends, but not necessarily paid.

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