Dividends on the Statement of Cash Flows Other information available for 2014 is
ID: 2754043 • Letter: D
Question
Dividends on the Statement of Cash Flows
Other information available for 2014 is as follows:
Hummelsville reported net income of $284,000 for the year.
It declared and distributed a stock dividend of $48,000 during the year.
It declared cash dividends at the end of each quarter and paid them within the next 30 days of the following quarter.
Required:
1. With the use of T accounts, determine the amount of cash dividends paid during the year for presentation in the Financing Activities section of the statement of cash flows.
$
Explanation / Answer
Income Statement Debit Credit Net Income 284000 Stock Dividend 48000 Cash Dividend: (284000-48000-125000) 111000 Transfer to Retained Earnings 125000 Retained Earnings Particulars Debit Credit Opening Balance 250000 Add: Transfer from Income Statement : (375000-250000) 125000 Closing Balance 375000 Dividend Payable Debit Credit Opening Balance 20000 Stock Dividend 48000 Cash Dividend 111000 Common Stock 48000 Cash (20000+48000+111000-48000-30000) 101000 Closing Balance 30000