Norris Company declared cash dividends of $60,000 during the year. Cash dividends payable were $20,000 at the beginning of the year and $25,000 at the end of the year. The amount of cash Norris Co. used for payment of dividends during the year was

a. $65,000

b. $55,000

c. $105,000

d. $80,000

b. $55,000

Explanation:

The movement in the dividend payable account which represents the difference between the payable opening an closing balances. This difference is due to dividend paid during the year as well as dividend declared and can be shown by the equation below.

Opening balance + Declared dividend - dividend paid = closing dividend

$20,000 + $60,000 - dividend paid = $25,000

Dividend paid = $20,000 + $60,000 - $25,000

= $55,000