Homework Answers
8. a.
| Financing Activities of Cash Flow Statement | |
| Particulars | Amount |
| Retained Earnings (beginning) | 545000 |
| Add :- Net Income | 375000 |
| Retained Earnings available for distribution | 920000 |
| Less :- Stock Dividend | 85000 |
| Difference | 835000 |
| Less:- Retained earnings (ending) | 375000 |
| Cash Balance | 460000 |
b.Stock dividend is non cash transaction, it affects only shareholders equity hence it is not shown in Cash Flow Statement.
9. Investing Activities and Non cash activities
In the given case, land was purchased for $100,000 by making a promissory note and down payment of $30,000. The down payment will be treated as cash transaction and shown under investing activities in cash flow statement. The remainder $70,000 is non cash transaction it won't be shown in cash flow statement. Since the amount of $70,000 is substantial, it will be reported separately at bottom of cash flow statement for providing the stakeholders a clear picture of the activities undertaken by company.
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