Bagwell's net income for the year ended december 31, year 2 was $193,000. information from bagwell's comparative balance sheets is given below. compute the cash paid for dividends during year 2. at december 31 year 2 year 1 common stock, $5 par value $ 508,000 $ 457,200 paid-in capital in excess of par 956,000 860,200 retained earnings 696,000 589,200

The cash paid for dividends during Year 2 is $86,200

Explanation:

For computing how much cash is paid for dividend during a year, first we have to compute the difference of retained earning. After that subtract the above balance from the second year net income amount.

In mathematically,

1. Difference in retained earnings = Year 2 balance - Year 1 balance

                                                       = $696,000 - $589,200

                                                       = $106,800

Now, cash dividend is equals to

=  Year 2 net income - Difference in retained earnings -

= $193,000 - $106,800

= $86,200

Hence, the cash paid for dividends during Year 2 is $86,200