1) The board of directors declared cash dividends totaling $197,600 during the c
ID: 2459283 • Letter: 1
Question
1) The board of directors declared cash dividends totaling $197,600 during the current year. The comparative balance sheet indicates dividends payable of $53,400 at the beginning of the year and $48,100 at the end of the year.
What was the amount of cash payments to stockholders during the year?
2) The cash flows from operating activities are reported by the direct method on the statement of cash flows. Determine the following:
a. If sales for the current year were $609,100 and accounts receivable decreased by $42,000 during the year, what was the amount of cash received from customers?
b. If income tax expense for the current year was $43,700 and income tax payable decreased by $4,800 during the year, what was the amount of cash payments for income taxes?
Explanation / Answer
1) Opening balance of dividend payable 53400 Add: Cash dividend declared for the current year 197600 Less : closing balance of dividend payable 48100 Cash payments to stockholders during the year 202900 2a) Let opening receivable =x then closing receivable = x -42000 Sales = 609100 Cash received from customers = opening receivable + sales - closing receivables = x + 609100 -( x - 42000) =x + 609100 - x + 42000 = 651100 2b) Let opening tax payable = x closing tax payable = x - 4800 Tax expense for the current year = 43700 Taxes paid = opening tax payable + tax expense for the current year - closing tax payable = x + 43700 - ( x - 4800) = x + 43700 - x + 4800 = 48500
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