The following information pertains to Alpha Computing at the end of 2015:
Alpha Computing's Retained Earnings account had a zero balance at the beginning of 2015.What amount of dividends did the company pay in 2015?

Alpha Computing’s Retained Earnings account had a zero balance at the beginning of 2015. What amount of dividends did the company pay in 2015?
A) $280,000.
B) $150,000.
C) $30,000.
D) $80,000.

Question

The following information pertains to Alpha Computing at the end of 2015:
Alpha Computing's Retained Earnings account had a zero balance at the beginning of 2015.What amount of dividends did the company pay in 2015?

Alpha Computing’s Retained Earnings account had a zero balance at the beginning of 2015. What amount of dividends did the company pay in 2015?
A) $280,000. 
B) $150,000. 
C) $30,000. 
D) $80,000.

Quizplus · Accepted Answer

Since the Retained Earnings account had a zero balance at the beginning of 2015, the dividends paid during the year would be equal to the total loss incurred by the company in 2015. If the company had made a profit, then the dividends paid would have been less than the profit. Option C is the only choice that represents a loss of $30,000.

The Following Information Pertains to Alpha Computing at the End