Question

The following information is given for Rose Company for year 2019. Beginning of the year: Total Assets $90,000 Total Liabilities $35,000 Total Stockholders' Equity ? End of the year: Total Assets $120,000 Total Liabilities 50,000 Total Stockholders' Equity Also, during the year Rose had $90,000 revenues, $80,000 expenses. Additional investment made by owners in the business was $50000. Compute the amount of dividend paid by company during the year. Example of Answer: 4000 (No comma, space, decimal point, or $ sign) A

Answer 1

Solution :

Dividend

45000

Working :

Stockholder Equity at the beginning = Total Assets - Total Liabilities

                                                = $ 90,000 - $ 35,000

                                                         = $ 55,000.

Stockholder Equity at the end    = Total Assets - Total Liabilities

                                             = $ 120,000 - $ 50,000

                                                = $ 70,000.

Stockholder at the end         = Stockholder's Equity at the Beginning + Additional Investment + Net Income - Dividend Paid

$ 70,000     = $ 55,000 + +$ 50,000 + ($ 90,000 - $ 80,000) - Dividend Paid    

$ 70,000     = $ 55,000 + $ 50,000 + $ 10,000 - Dividend Paid

$ 70,000     = $ 115,000 - Dividend Paid

Dividend Paid                         = $ 115,000 - $ 70,000

                                               = $ 45,000

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