a corporation had year end 2004 and 2005 retained earnings balances of $320,000 and $400,000, respectively. The firm reported net profits after taxes of $100,000 in 2005. the firm paid dividends in 2005 ofwhat
To find out the dividends paid in 2005, we need to calculate the change in retained earnings from 2004 to 2005.
The change in retained earnings can be calculated as:
Retained Earnings (2005) - Retained Earnings (2004)
In this case, the retained earnings in 2004 were $320,000, and in 2005, they were $400,000.
Change in Retained Earnings = $400,000 - $320,000 = $80,000
Since the net profits after taxes in 2005 were $100,000, and the change in retained earnings was $80,000, we can assume that the remaining $20,000 was reinvested into the company.
Therefore, the dividends paid in 2005 would be:
Net Profits after Taxes - Change in Retained Earnings
Dividends Paid = $100,000 - $80,000 = $20,000