Brief Exercise 13-8 Canadian Tire Corporation, Limited reported net income of $7
ID: 2541280 • Letter: B
Question
Brief Exercise 13-8 Canadian Tire Corporation, Limited reported net income of $735.9 million for the year ended January 2, 2016. Its retained earnings were $4,075.1 million at the beginning of the year and $4,172.0 million at the end of the year. It had no dividends payable at the beginning or end of the year. Assuming no other changes to retained earnings, what amount of dividends did Canadian Tire pay during the year? (Round answer to 1 decimal place, e.g. 15.2.) Dividend paid$ Would your answer change if you knew that the Dividends Payable account increased during the year? The answewould not million nge if the Dividends Payable account increased during the year would LINK TOExplanation / Answer
Retained earnings during the year = yearend balance – beginning balance
= 4172 – 4075.1
= 96.9 million
Net income during the year was 735.9 million
We know that retained earnings is what is left after paying common shareholders dividend.
Retained earnings = net income – dividend
96.9 = 735.9 – dividend
Dividend = 735.9 – 96.9
= 639 million
The answer would not change
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