1) The Retained Earnings balance was $23,500 on January 1. Net income for the ye
ID: 2393235 • Letter: 1
Question
1) The Retained Earnings balance was $23,500 on January 1. Net income for the year was $19,000. If Retained Earnings had a credit balance of $25,000 after closing entries were made for the year, and if additional stock of $5,800 was issued during the year, what was the amount of dividends declared during the year?
A) $24,800
B) $17,500
C) $11,700
D) $26,300
2) A corporation prepared its statement of cash flows for the year. The following information is taken from that statement:
What is the cash balance at the beginning of the year?
A) $3,000
B) $17,200
C) $7,100
D) $5,800
3)
Two years ago, your company bought $46,500 in bonds from another company. This month, it sold half of those bonds for $21,840 and purchased the common stock of another company for $1,600. On the statement of cash flows for this accounting period, your company would report a net cash:
A) outflow of $20,240 from investing activities.
B) inflow of $21,840 from investing activities.
C) inflow of $20,240 from investing activities.
D) outflow of $21,840 from investing activities.
2) A corporation prepared its statement of cash flows for the year. The following information is taken from that statement:
Explanation / Answer
1.
Amount of dividend=Opening retained earnngs balance + Net income - Closing retained earnings balance
=23500+19000-25000
=17500 ( Option B)
2.
Cash balance at the beginning of the year= Ending cash balance - Net change in Cash during the year
=10100-(14900+4400-12200)
=10100-7100
=3000 ( Option A)
3.
Calculation of Net cash flow
=Receipts from sale of bond - Payment for purchase of stock
=21840-1600
=20240 (Inflow from Investing activity) Option C
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