Stockholders' equity

The statement of retained earnings or the statement of stockholders equity reconciles the net income, dividends paid, and the change in retained earnings during a particular year.

Which of the following best describes shareholders equity?

Equity is the initial claim on value of the assets before the firm pays off its liabilities.

Equity is the difference between the companys assets and liabilities.

Purple Dog Pet Supply Inc. (PDPS) released its annual results and financial statements. Caroline is reading the summary in the business pages of todays paper. In its annual report this year PDPS reported a net income of $165,000. Last year, the company reported a retained earnings balance of $561,000, whereas this year it increased to $660,000. How much was paid out in dividends this year?

$264,000

$316,000

$1,221,000

$66,000