The 2010 balance sheet of Maria’s Tennis Shop, Inc., showed $470,000 in the comm
ID: 2755339 • Letter: T
Question
The 2010 balance sheet of Maria’s Tennis Shop, Inc., showed $470,000 in the common stock account and $4.5 million in the additional paid-in surplus account. The 2011 balance sheet showed $510,000 and $4.8 million in the same two accounts, respectively.
If the company paid out $420,000 in cash dividends during 2011, what was the cash flow to stockholders for the year? (Enter your answer in dollars, not millions of dollars, i.e. 1,234,567.)
The 2010 balance sheet of Maria’s Tennis Shop, Inc., showed $470,000 in the common stock account and $4.5 million in the additional paid-in surplus account. The 2011 balance sheet showed $510,000 and $4.8 million in the same two accounts, respectively.
Explanation / Answer
Cashflow to shareholders = cash dividend paid - increase in common stock - increase in additional paid-in surplus
= $420,000 - ($510,000 - $470,000) - ($4,800,000 - $4,500,000)
= $80,000
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