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30 June, 06:17

The following information pertains to Alpha Computing at the end of 2015:

Assets $980,000

Liabilities $437,500

Net Income $242,500

Common Stock $395,000

Alpha Computing's Retained Earnings account had a zero balance at the beginning of 2015.

What amount of dividends did the company pay in 2015?

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  1. 30 June, 08:41
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    The amount of dividends the company paid in 2015 is $95000.

    Explanation:

    Dividends is paid from the net income of the company and the net income includes retained earnings balance at the end of each financial year.

    Assers = stockholders equity (stock + retained earnings) + liabilities

    $980,000 = $395,000 + retained earnings + $437,500

    retained earnings = $147500

    net income = dividends + retained earnings

    dividends = net income - retained earnings

    = $242,500 - $147500

    = $95000

    Therefore, the amount of dividends the company paid in 2015 is $95000.
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