Please find below given calculation:
Total dividends declared to be calculated as follows:
Opening retained earnings........................................................ $100,000
Net income for the year.............................................................. 40,000
Closing retained earnings............................................................. (125,000)
Dividends declared during the year..............................................$ 15,000
Since $8,000 is the amount of stock dividends declared, the amount of cash dividends declared this year is $7,000 ($15,000 - $8,000).
The amount of cash dividends paid during the year can be calculated as follows:
Decrease in the cash dividends payable account during the period ...........$ 5,000
Cash dividends declared during the year................................................ 7,000
Cash paid for dividends during the year................................................ $12,000
Stock dividends declared does not affect the dividends payable account.
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Dinesh Thazhathidam
Director/Manager
DUBAI
United Arab Emirates
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Original Message:
Sent: 09-29-2021 06:48 PM
From: Sunhye Lee
Subject: CMA Part 1_Cash dividends
Hi All,
Could anyone explain why the answer of the following question is $12,000?
Upon the answer, the formula is as below, but i do not understand why $5,000 was added..
$100,000 + $40,000 - $8,000 + $5,000 – X
= $137,000 – X
X =$12,000
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Sunhye Lee
Controller
Seoul
Korea, Republic of
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