ACCOUNT NO. ACCOUNT Common Stock, $40 par Balance Debit Credit Item Debit Credit

Question

ACCOUNT NO. ACCOUNT Common Stock, $40 par Balance Debit Credit Item Debit Credit D Date 4,800,000 6,000,000 6,300,000 1 Balance, 120,000 shares Jan. Apr. 2 30,000 shares issued for cash June | 30 | 5% stock dividend 1,200,000 300,000 ACCOUNT NO. ACCOUNT Paid-In Capital in Excess of Par-Common Stock Balance Debit CreditD Debit Credit Date Item 360,000 1,080,000 1,230,000 1 Balance Jan. Apr. 2 30,000 shares issued for cash June 30 Stock dividend 720,000 150,000 ACCOUNT Retained Earnings ACCOUNT NO. Balance Debit Creditbit Credit Date Item 1 Balance Jan. June 30 Stock dividend Dec. 30 Cash dividend 2,000,000 1,550,000 1,235,000 2,235,000 450,000 315,000 31 Net income 1,000,000

Explanation / Answer

1) Indication of items to be reported on the statement of cash flows :

A) Issue of 30,000 shares on Apr 2nd which amounts to $1,200,000 comes in cash flow statement under the category of cash flow from financing activities. Represent positive cash flow

B) Payment of cash dividend on Dec 30th which amounts to $315,000 comes in cash flow statement under the category of cash flow from financing activities. Represent negative cash flow.

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