On 12/31/2020, Heaton Industries Inc. reported retained earnings of $600,000 on its balance sheet, and it reported that it had $172,500 of net income during the year. On its previous balance sheet, at 12/31/2019, the company had reported $555,000 of retained earnings. No shares were repurchased during 2020. How much in dividends did Heaton pay during 2020? Select the correct answer.

Question

Business

Tiffany Jones

1 March, 00:05

On 12/31/2020, Heaton Industries Inc. reported retained earnings of $600,000 on its balance sheet, and it reported that it had $172,500 of net income during the year. On its previous balance sheet, at 12/31/2019, the company had reported $555,000 of retained earnings. No shares were repurchased during 2020. How much in dividends did Heaton pay during 2020? Select the correct answer.

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Answers (1)

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Tabitha Mercado · Answer 1

Dividends = $127,500

Explanation:

Heaton Industries Inc.

Statement of Retained Earnings

For the year ended, December 31, 2020

Balances, January 1, 2020 $555,000

Add: Net Income $172,500

$727,500

Less: Dividends (Note - 1) $ (127,500)

Ending balance of retained earnings $600,000

Note - 1: Calculation

Balance after net income - dividends = ending balance

or, $727,500 - dividends = $600,000

or, $727,500 - $600,000 = dividends

or, dividends = $127,500