Based on the information in Table, Calculate the amount of dividends paid by Jones Company in 2010 no assets were disposed of during the year, and there was no change in interest payable or taxes payable.
|December 2009||December 2010|
A company can issue two types of dividend namely the cash dividend and stock dividend. The cash dividend is the distribution of net income in the form of cash while the stock dividend means the distribution of shares to the shareholders in the proportion of their current holdings. A cash dividend is declared by the board of directors in the annual general meeting and it is paid within 30 days of the date of declaration and cannot be revoked once declared.
Answer and Explanation:
The amount of dividends paid by Jones Company in 2010 is $2,000.
As per the data:
- Beginning balance in retained earnings (2009) = $1,500
- Ending balance in retained earnings (2010) = $3,500
- Net income for 2010 = $4,000
- Ending retained earnings = Beginning balance in retained earnings + Net income of the period - Dividends paid
- Dividends paid = $1,500 + $4,000 - $3,500
- Dividends paid = $2,000
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from Finance 101: Principles of FinanceChapter 16 / Lesson 1