During the accounting period there were no share issues,liabilities increased by $45 000,assets increased by $90 000,expenses of $55 000 were incurred and net profit was $115 000.Therefore,dividends declared must have been:
A) $15 000
B) $60 000
C) $70 000.

Question

Quizplus · Accepted Answer

Assets increased by $90,000, liabilities increased by $45,000, and expenses were $55,000. So, total increases were $90,000 + $45,000 + $55,000 = $190,000. Net profit was $115,000. So, the increase in equity must have been $190,000 - $115,000 = $75,000. Since there were no share issues, the increase in equity must have been due to retained earnings and dividends. So, dividends declared must have been $75,000 - $115,000 = $70,000.

During the Accounting Period There Were No Share Issues,liabilities Increased