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7 June, 05:45

On 12/31/2020, Heaton Industries Inc. reported retained earnings of $600,000 on its balance sheet, and it reported that it had $172,500 of net income during the year. On its previous balance sheet, at 12/31/2019, the company had reported $555,000 of retained earnings. No shares were repurchased during 2020. How much in dividends did Heaton pay during 2020? Select the correct answer.

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  1. 7 June, 07:45
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    Dividends = $127,500

    Explanation:

    Heaton Industries Inc.

    Statement of Retained Earnings

    For the year ended, December 31, 2020

    Balances, January 1, 2020 $555,000

    Add: Net Income $172,500

    $727,500

    Less: Dividends (Note - 1) $ (127,500)

    Ending balance of retained earnings $600,000

    Note - 1: Calculation

    Balance after net income - dividends = ending balance

    or, $727,500 - dividends = $600,000

    or, $727,500 - $600,000 = dividends

    or, dividends = $127,500
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