Question

For the past year, Zhao Events 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

Answer 1

Based on the other transactions, the amount of dividends that was paid that year was $158,704.

After tax Net income

= Taxable income x ( 1 - tax)

= 198,600 x ( 1 - 21%)

= $156,894

Dividends during year

= Opening retained earnings + After tax income - Closing retained earnings

= 318,750 + 156,894 - 316,940

= $158,704

In conclusion, the dividends paid were $158,704.

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