Question

The chester company has just issued $6,484,096 in dividends last year. The effect of this payment on the balance sheet is:

Answer 1

Answer:

The Digby Company has just issued $6,493,586 in dividends last year. The effect of this payment on the balance sheet is: Select: 1 Equity will decrease $6,493,586 Net Profit will decrease $6,493,586 Expenses will increase $6,493,586 Liabilities will increase $6,493,586 Digby has a ROA of 0.13 (ROA = Net income/Total Assets). That means: Select: 1 Every dollar of Digby's assets result in earnings of $0.87. Digby uses $0.87 of each dollar earned to purchase assets. Every dollar of Digby's assets result in earnings of $0.13. Digby uses $0.13 of each dollar earned to purchase assets. Midyear on July 31st, the Baldwin Corporation's balance sheet...

Explanation:

Answer 2

Equity will reduce by the amount of $6,484,096

Explanation:

• When the management of the company declares the dividend payment, then the retained earnings of the shareholders will decrease through the amount of dividend payout.

• And the current liabilities (CL) also increases through the same amount. And the when the payment of dividend is made, there would be an equivalent decrease in the cash and cash equivalents in the Asset side of the balance sheet of the company.
• Therefore, the equity will decrease by the amount.