Question

At December 31 Common stock, $10 par value Paid-in capital in excess of par Retained earnings Current Prior Year Year $ 133,000 $ 124,000 591,000 354,000 337,500 311,500 The company's net income for the current year ended December 31 was $60,000. 1. Complete the T-accounts to calculate the cash received from the sale of its common stock during the current year. Common Stock, $10 Par Beg. bal. End. bal. Paid-in Capital in Excess of Par Beg. bal. End. bal. Cash received 2. Complete the T-account to calculate the cash paid for dividends during the current year.. Retained Earnings Beg. bal. End. bal.

Answer 1

Requirement 1:

1.

	Debit	Credit
Common Stock, $10 Par
Beg. Bal.		$124,000
Cash		$9,000
End. Bal.		$133,000
Paid-in Capital in Excess of Par
Beg. Bal.		$354,000
Cash		$237,000
End. Bal.		$591,000
Cash received [9,000+237,000]	$246,000

2.

Retained Earnings	Debit	Credit
Beg. Bal.		$311,500
Income summary (net income)		$60,000
Dividends	$34,000
End. Bal.		$337,500

Requirement 2:

Financing Activities
Additional short-term borrowings	$54,000
Cash dividends paid	($44,000)
Interest paid	($22,000)
Total	($12,000)

Purchase of short-term stock investments is an "Operating activity".

Requirement 3:

Case X	Cash received from customers	$737,580
Case Y	Cash paid for rent	$145,926
Case Z	Cash paid for inventory	$622,633

Calculations:

Case X	Accounts receivable, Beginning balance	$59,000
	Sales	$760,000
	Accounts receivable, Ending balance	($81,420)
	Cash received from customers	$737,580
Case Y	Rent payable, Beginning balance	$11,050
	Rent expense	$144,600
	Rent payable, Ending	($9,724)
	Cash paid for rent	$145,926
Case Z	Inventory, Ending balance	$173,364
	Cost of goods sold	$682,000
	Inventory, Beginning balance	($211,420)
	Purchases	$643,944
	Add: Accounts payable, beginning balance	$88,796
	(Less): Accounts payable, ending balance	($110,107)
	Cash paid for inventory	$622,633