The statement of stockholders equityor the statement of retained earningsreconciles and reports a firms net income, dividends paid, shares issued and repurchased, and change in retained earnings during a particular year.

Which of the following best describes a firms stockholders equity?

Equity is the sum of what a corporations initial stockholders paid when they bought company shares and the earnings that the company has retained over its years of operations.

Equity is the difference between a corporations paid-in capital and its retained earnings.

Yesterday, Purple Whale Foodstuffs Inc. released its annual results and financial statements. Jagger is reading the summary in the business pages of todays papers website. In its annual report this year, Purple Whale Foodstuffs reported a net income of $6,200,000. Last year, the company reported a retained earnings balance of $4,675,000, whereas this year it increased to $5,500,000. How much was paid out in dividends this year?

$5,375,000

$7,025,000

$6,181,250

$4,837,500