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30 June, 11:08

For the past year, Jenn's Floral Arrangements had taxable income of $198,600, beginning common stock of $68,000, beginning retained earnings of $318,750, ending common stock of $71,500, ending retained earnings of $316,940, interest expense of $11,300, and a tax rate of 21 percent. What is the amount of dividends paid during the year

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  1. 30 June, 11:24
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    Dividends=$158,704

    The amount of dividends paid during the year is $158,704

    Explanation:

    Taxable Income=$198,600

    Tax rate=i=21%=0.21

    Beginning retained earnings=$318,750

    Ending retained earnings=$316,940

    Amount of dividends paid during the year=?

    Income after tax is paid this year is:

    Net income=$198,600 * (1-i)

    Net income=$198,600 * (1-0.21)

    Net income=$156,894

    Net retained earnings=Ending retained earnings - Beginning retained earnings

    Net retained earnings=$316,940 - $318,750

    Net retained earnings=-$1,810

    Dividends=Net income - Net retained earnings

    Dividends=$156,894 - (-$1,810)

    Dividends=$158,704

    The amount of dividends paid during the year is $158,704
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