Question

New 10 eBook Show Me How Calculator Determining Cash Payments to Stockholders The board of directors declared cash dividends totaling $136,200 during the current year. The comparative balance sheet indicates dividends payable of $38,100 at the beginning of the year and $34,300 at the end of the year. What was the amount of cash payments to stockholders during the year?

Answer 1

Solution:

Requirement A:

Amount of cash payments to stock holders during the year is $ 140,000

Dividend Payable
		Beg balance	$       38,100
Cash	$ 140,000	Cash Dividend	$     136,200
		End Balance	$       34,300

Requirement B:

Item	Section of Statement of Cash Flows	Added or Deducted	Amount
Retire Bonds	Financing Activity	Deducted	$              80,960.00
Issue Bonds	Financing Activity	Added	$            264,300.00
Amortization of discount	Operating Activity	Added	$                 1,520.00

Notes:

1) Cash paid to retiring bond:

Retired Bond Par Value	$               88,000
Less: Unamortized Discount on retiring bond	$               (7,040)
Carrying Value / Cash paid	$               80,960

2) Cash received from issuing bond

Issue Bond Par Value	$             264,000
Less: Discount on bond issue	$             (17,700)
Carrying Value / Cash received	$             246,300

3) Discount amortization during the year $ 1,520 as given in discount on bonds payable account. This amount is added to net income in arriving at net cash flow from operating activity because it is non cash transaction.