If the opening balance of dividends payable is $120,000 and the closing balance is $90,000, and dividends declared at the end of the period are $50,000, how much cash was paid for dividends in that period?$20,000$40,000$0$80,000
Question
If the opening balance of dividends payable is 90,000, and dividends declared at the end of the period are 20,0000$80,000
Solution
The amount of cash paid for dividends in that period is $80,000.
Here's how to calculate it:
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The opening balance of dividends payable is the amount of dividends that were declared but not yet paid at the start of the period, which is $120,000.
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The closing balance of dividends payable is the amount of dividends that were declared but not yet paid at the end of the period, which is $90,000.
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Dividends declared at the end of the period are added to the dividends payable, increasing the liability.
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To find out how much cash was paid for dividends during the period, you need to add the dividends declared to the opening balance of dividends payable, and then subtract the closing balance of dividends payable.
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So, the calculation would be: 50,000 (dividends declared) - 80,000.
Therefore, the amount of cash paid for dividends in that period is $80,000.
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