Problem 34 Statement of Stockholders Equity In its most rece

Problem 3-4 Statement of Stockholders\' Equity In its most recent financial statements, Newhouse Inc. reported $20 million of net income and $260 million of retained earnings. The previous retained earnings were $247 million. How much in dividends were paid to shareholders during the year? Assume that all dividends declared were actually paid. Write out your answer completely. For example, 25 million should be entered as 25,000,000. Round your answer to the nearest dollar, if necessary

Solution

Beginning Retained Earnings = $247 million
Net Income = $20 million
Ending Retained Earnings = $260 million

Ending Retained Earnings = Beginning Retained Earnings + Net Income - Dividend
$260 million = $247 million + $20 million - Dividend
Dividend = $7 million
Dividend = $7,000,000

So, dividends of $7,000,000 were paid during the year.