Use the following information for questions 19 and 20 The balance in retained ea
ID: 2601190 • Letter: U
Question
Use the following information for questions 19 and 20 The balance in retained earnings at December 31, 2011 was $720.000 and at December 31, 2012 wa $582,000. Net income for 2012 was $500,000. A stock dividend was dectared and distrbutedwch paid increased common stock $200,000 and paid-in capital $110 806 A cash dividend was deciared and 19. The amount of the cash dividend was a. 248,000. $328,000. C 9442,000 d. $638,000 20. The stock dividend should be reported on the statement a. an outflow Erom tinancing activities of $200,000 b. an outflow from tinancing activities of 310,00o of cash flows (ndirect mathod) as an outflow from investing activities of $310,00o. Stock dividends are not shown on a statement of cash 1ows 21. Walsh Co.'s prepaid insurance was $90,000 at December 31, 2012 and $45,000 at December 3 2011. Insurance expense was $36,000 for 2012 and $27,000 for 2011. What amount of cash disbursements for insurance would be reported in Walsh's 2012 net cash provided by operaing activities presented on a direct basis? a. $99,000 $81,0o00 C. $54, 000 d. $36, 000. $8000 ed olo 22. Which of the following should be disclosed in a Summary of Significant Accounting Policies? Types of executory contracts Amount for cumulative effect of change in accounting principle Claims of equity holders Depreciation method followed a. b. 500,000 c 2,000,000 23. The following information was taken from the 2011 financial statements of Sawyer Corporation Bonds payable, January 1, 2011 Bonds payable, December 31, 2011 During 2011 A $450,000 payment was made to retire bonds payable with a face amount of $500,000 In its statement of cash flows for the year ended December 31, 2011, what amount should Sawyer report as proceeds from issuance of bonds payable? a. $1,500,000 ? $1,800, 000 b.$1,750,000 d. $2,200, 000 Bonds payable with a face amount of $200,000 were issued in exchange for equipmentExplanation / Answer
Question no:19 Answer is option (b) $328,000 Computation of cash Dividend Amount in $ Opening retained Earnings 7,20,000 Add: net Inocme 500000 Less: Stock dividend -310000 less: Closing retained earnings -582000 cash Dividend 3,28,000 Question no:20 Answer is option (d) Stock Dividends are not shown on the statement of cash Flows in the cash flow statement only the cash inflow and outflow will be reported . In case of Stock Dividend Declared , there is no cash outflow or inflow. It mearly convertion of retained earnings inot stock. So stock dividend will not be reported in statement of cash flow statement Question no: 21 Answer is option (b) $81000 Closing Prepaid insurance 90000 less: opening Insurance balance -45000 Add: Insurance expense 36000 amount paid during the year 81000 Questionno:22 Answer is option is option (D) depreciation method Followed depreciation method followed During the year Disclosed in a summary of Significant Accounting Ploicies Question no:23 Answer is option (C ) $1800,000 proceeds From issue of Bonds $2,000,000 Less: Bonds issued for Exchange of Asset $200,000 cash flow issue of Bonds $1800,000