The year-end 2015 balance sheet of Brandex Inc. listed common stock and other paid-in capital at $2,400,000 and retained earnings at $4,700,000. The next year, retained earnings were listed at $5,000,000. The firm’s net income in 2016 was $1,030,000.

The year-end 2015 balance sheet of Brandex Inc. listed common stock and other paid-in capital at $2,400,000 and retained earnings at $4,700,000. The next year, retained earnings were listed at $5,000,000. The firm’s net income in 2016 was $1,030,000. There were no stock repurchases during the year. What were the dividends paid by the firm in 2016?

 

Explanation
Net income = Increase in retained earnings + Dividends
$1,030,000 = ($5,000,000 − 4,700,000) + Dividends ⇒
Dividends = $730,000