Desert Apparel has 5,000 shares of common stock outstanding. On April 1, the com
ID: 2464860 • Letter: D
Question
Desert Apparel has 5,000 shares of common stock outstanding. On April 1, the company declares a $2 per share dividend to stockholders of record on April 15. The dividend is paid on April 30. Record all necessary entries on the appropriate dates for cash dividends. Indicate whether each of the following transactions increases(+), decreases(-), or has no effect (NE) on total assets, total liabilities, and total stockholders' equity. Wireless Technologies reports cost of goods sold of $40 million. Inventory at the beginning and end of the year are $4 million and S3 million, respectively. Accounts payable at the beginning and civ. the year are $3 million and $6 million, respectively. What is the amount of cash paid to suppliers?Explanation / Answer
13) Apr-15 Retained Earnings ( 5000 * 2) Dr 10000 Dividend Payable ( 5000 * 2) Cr 10000 ( To record dividend declared @ 2 for 5000 common stock) Apr-30 Dividends Payable Dr 10000 Cash Cr 10000 ( To record payment of dividend) 14) Transactions Total Assets Total Liabilities Total Stockholders equity Issue common stock Increases ( + ) Increases ( + ) Issue preferred stock Increases ( + ) Increases ( + ) Purchase treasury stock Decrease (-) Decrease (-) Sale of treasury stock Increases ( + ) Increases ( + ) 15) opening inventory + Purchases - closing inventory = Cost of goods sold Hence Purchases = Cost of goods sold - opening inventory + closing inventory Purchases = 40 - 4 + 3 = 39 million Cash paid to suppliers = opening accounts payable + Purchases - closing accounts payable Hence, cash paid to suppliers = 3 + 39 - 6 = 36 million