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On January 2, 2013, Slurg Corporation paid $600,000 to acquire 20% interest in Padwaddy Inc

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On January 2, 2013, Slurg Corporation paid $600,000 to acquire 20% interest in Padwaddy Inc. At that time, the book value of Padwaddy's stockholders' equity included $700,000 of common stock and $1,800,000 of retained earnings. All the excess purchase cost over the book value acquired was attributable to a patent with an estimated life of 10 years. Padwaddy paid $6,250 of dividends each quarter for the next two years, and reported net income of $180,000 for 2013 and $220,000 for 2014. Slurg recorded all activities related to their investment using the equity method.
Required:
1.   Calculate Slurg's income from Padwaddy for 2013.
2.   Calculate Slurg's income from Padwaddy for 2014.
3.   Determine the balance of Slurg's Investment in Padwaddy account on December 31, 2014.
Requirement 3:
Initial investment in Padwaddy                                     $600,000
Plus: Net change for 2013: (Income of $26,000 - 
Dividends of $5,000)                                                         21,000
Plus: Net change for 2014: (Income of $34,000 - 
Dividends of $5,000)                                                         29,000
Investment balance at December 31, 2014:                       $650,000
the answer said that the dividends go to $5,000 I don't know why.
Can you explain why dividends are $5000?