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The cash dividends paid to stockholders is $9000.
What is meant by retained earning?
After deducting dividend payments, a company's retained earnings are its total net earnings or profits. The term "retained" refers to a crucial idea in accounting that describes how earnings were held by the corporation rather than distributed to shareholders as dividends.
These are the remaining net income for the company after dividends have been paid to its shareholders. Typically, management of the company decides whether to keep the profits or distribute them to the share holders. A business with an eye toward expansion may choose to employ retained earnings rather than paying any dividends at all or in very tiny sums. Retained earnings can be used by businesses, among other things, to boost output, hire additional salespeople, introduce new products, or repurchase shares.
These are a crucial factor in determining how financially sound a firm is because they demonstrate the net income that has been conserved over time and is consequently available for distribution to shareholders or reinvestment in the company.
Here, we have,
Beginning Retained Earning= $75,000
Net Income= $24,000
Ending Retained Earning= $90,000
We know that, Ending Retained Earnings= Beginning Retained Earning+ Net Income - Dividend
Putting values in the formula, we get
Dividend= $(75,000+24,000-90,000)
Dividend= $9000
⸫ Thus, the cash dividend is $9000.
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