New Orleans Chemicals Company follows the indirect method to prepare its statement of cash flows. Refer to the following portion of the comparative balance sheet: New Orleans Chemicals Company Comparative Balance Sheet December 31, 2018 and 2017 2018 2017 Increase / (Decrease) Common Stock $33,000 $2,200 $30,800 Retained Earnings 155,000 89,000 66,000 Treasury Stock ( 8,100) ( 5,200) (2,900) Total Equity $179,900 $86,000 $93,900 Net Income for 2018 was $91,000. Based on the above information, determine the amount of dividends declared during 2018.

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Business

Tomcat

30 July, 04:44

New Orleans Chemicals Company follows the indirect method to prepare its statement of cash flows. Refer to the following portion of the comparative balance sheet: New Orleans Chemicals Company Comparative Balance Sheet December 31, 2018 and 2017 2018 2017 Increase / (Decrease) Common Stock $33,000 $2,200 $30,800 Retained Earnings 155,000 89,000 66,000 Treasury Stock ( 8,100) ( 5,200) (2,900) Total Equity $179,900 $86,000 $93,900 Net Income for 2018 was $91,000. Based on the above information, determine the amount of dividends declared during 2018.

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Paloma · Answer 1

The dividend amount is $25,000

Explanation:

The amount of dividend which is declared during 2018 is computed as:

Dividend = Net Income + Retained Earnings of 2017 - Retained Earnings of 2018

where

Net Income is $91,000

Retained Earnings of 2017 is $89,000

Retained Earnings of 2018 is $155,000

Putting the values in the above:

= $91,000 + $89,000 - $155,000

= $180,000 - $155,000

= $25,000