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3 September, 06:41

Fashion, Inc. had a Retained Earnings balance of $13,000 at December 31, 2018. The company had an average annual income of $6,500 over the next 3 years, and an ending Retained Earnings balance of $13,000 at December 31, 2021. What was the total amount of dividends paid over the last three years?

1.$18,750.

2.$19,500.

3.$21,000.

4.$22,500.

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Answers (1)
  1. 3 September, 08:28
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    2.$19,500.

    Explanation:

    The computation of the amount of dividend is shown below:

    As we know that

    Ending retained earning balance = Beginning retained earning balance + net income - cash dividend paid

    $13,000 = $13,000 + $6,500 * 3 years - cash dividend paid

    So, the cash dividend paid is $19,500

    We simply applied the above formula

    Hence, the correct option is 2.
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