Johnson had a begining balance in retained earnings of 10000

Johnson had a begining balance in retained earnings of $100,000. The ending balance is $80,000. Johnson\'s net income for the period was a LOSS of $3,000. Johnson pays dividends as soon as they are declared. What amount of dividends did Johnson pay this period? a.)$17,000 b.) Johnson cannot pay dividends, because the company had a net LOSS c.)$20,000 d.) $23,000

Solution

Solution:

Closing Retained earnings = Beginning balance of Retained Earnings + Net income - Dividends
$80,000 = $100,000 - $3000 - Dividends

Dividends Paid = $100,000 - $80,000 - $3,000 = $17,000