Determine cash flow effects of P12-2A The following account balances relate to t

Question

Determine cash flow effects of P12-2A The following account balances relate to the stockholders' equity accounts of changes in equity accounts. (LO 2), AN Molder Corp. at year-end. 2017 2016 Common stock, 10,500 and 10,000 shares respectively, for 2017 and 2016 Preferred stock, 5,000 shares Retained earnings $160,800 $140,000 125,000 270,000 125,000 300,000 A small stock dividend was declared and issued in 2017. The market price of the shares was $8,800. Cash dividends were $20,000 in both 2017 and 2016. The common stock has no par or stated value. Instructions (a) What was the amount of net income reported by Molder Corp. in 2017? (b) Determine the amounts of any cash inflows or outflows related to the common stock (a) Net income$58,800 and dividend accounts in 2017 (c) Indicate where each of the cash inflows or outflows identified in (b) would be classified on the statement of cash flows

Explanation / Answer

a) Net income closing balance of retained earnings 300,000 Add: Stock dividend 8,800 Cash dividend 20,000 328,800 less:opening balance of retained earnings -270,000 Net income for the year 2017 58,800 answer b) Cash inflow related to common stock closing balance of CS 160,800 less:Addittion due to stock dividend -8,800 152,000 less :opening balance of CS -140,000 Stock issued for cash 12,000 cash inflow due to common stock 12000 cash outflow due to dividend 20,000 c) cash inflow due to common stock 12000 cash outflow due to dividend 20,000 Both will be classified as financing activity

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