Question

Alpha Co. is paying a $.72 per share dividend today. There are 138,000 shares outstanding with a par value of $1 per share. As a result of this dividend, the:

Answer 1

The dividend paid reduces retained earnings by  $99,360

Dividend is the money paid out of profit after tax by a company to its shareholders.

We can compute the dividend paid by :

= Per share dividend * Shares outstanding

= $.72 * 138,000

= $99,360

Hence, dividend paid is $99,500 which reduces retained earnings by same amount.

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