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25 June, 06:12

Temple Square Inc. reported that its retained earnings for 2005 were $490,000. In its 2006 financial statements, it reported $60,000 of net income, and it ended 2006 with $510,000 of retained earnings. How much were paid as dividends to shareholders during 2006

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  1. 25 June, 06:17
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    Dividend = $40,000

    Explanation:

    Given:

    Temple Square Inc. reported that its retained earnings for 2005 were $490,000.

    In its 2006 financial statements, it reported $60,000 of net income,

    It ended 2006 with $510,000 of retained earnings. (Ending retained earnings)

    Question asked:

    How much were paid as dividends to shareholders during 2006?

    Solution:

    Here given that Temple Square Inc. reported that its retained earnings for 2005 were $490,000, means this amount will carry forward and will be considered as Beginning retained earnings for 2006.

    Now, we have to find, how much dividends were paid to shareholders during 2006.

    As we know:

    Ending retained earnings = Beginning retained earnings + Net income - Dividend

    510,000 = 490,000 + 60,000 - Dividend

    510,000 = 550,000 - Dividend

    Subtracting both sides by 550,000

    - 40,000 = - Dividend

    Adding both sides by minus (-)

    Dividend = $40,000

    Therefore, Temple Square Inc. paid $40,000 to shareholders during 2006.
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