The 2014 balance sheet of Sugarpova’s Tennis Shop, Inc., showed $540,000 in the
ID: 2811238 • Letter: T
Question
The 2014 balance sheet of Sugarpova’s Tennis Shop, Inc., showed $540,000 in the common stock account and $3.4 million in the additional paid-in surplus account. The 2015 balance sheet showed $580,000 and $3.8 million in the same two accounts, respectively.
If the company paid out $500,000 in cash dividends during 2015, what was the cash flow to stockholders for the year? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)
The 2014 balance sheet of Sugarpova’s Tennis Shop, Inc., showed $540,000 in the common stock account and $3.4 million in the additional paid-in surplus account. The 2015 balance sheet showed $580,000 and $3.8 million in the same two accounts, respectively.
Explanation / Answer
Cash flow to stockholders
=dividend paid - net new equity
=dividend paid- [(Commonend + APISend)]- [(Common beg+APISbeg)]
=$5,00,000-[($5,80,000+3,800,000)-($5,40,000+$3,400,000)]
=5,00,000-(4,380,000-3,940,000)
=5,00,000-4,40,000
=$60,000
Cash flow to stockholders is $60,000
Note:APIS is additional paid in shares.
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