In 2015, Patnode announced and paid dividends of $1,000, the only dividend-related activity during the year is
Net income = Retained earnings, ending + Dividend paid - Retained earnings, beginning
= 38,600 + 1,000 - 34,000
= $5,600
Clearly positioned, dividends are a manner for corporations to share their income with investors. Agencies can use dividends to reward buyers and trap them to stick around. However, for a corporation to percentage profits with traders, it needs to without a doubt have profits to share.
They are paid out of the earnings and earnings of the organization. Dividends can be categorized both as normal or certified. Whereas ordinary dividends are taxable as ordinary earnings, qualified dividends that meet sure requirements are taxed at decreased capital advantage rates.
The short solution is “yes”. With an excessive financial savings price, sturdy investment returns, and an extended enough time horizon, this could cause unexpected wealth in the end. For plenty of traders who are just starting out, this may appear to be an unrealistic pipe dream.
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