Question

The December 31, 2018, balance sheet of Whelan, Inc., showed $154,000 in the common stock account and $2,790,000 in the additional paid-in surplus account. The December 31, 2019, balance sheet showed $164,000 and $3,090,000 in the same two accounts, respectively. The company paid out $159,000 in cash dividends during 2019 14.28 points What was the cash flow to stockholders for the year? (A negative answer should be indicated by a minus sign.

Answer 1

Answer:

Whelan, Inc.

The cash flow to stockholders for the year is $159,000, representing the cash dividends paid during 2019.

Explanation:

Cash flow to stockholders is the amount of cash that a company pays out to its shareholders, usually in the form of cash dividends.  Mainly, cash flows to stockholders in two major ways: dividends and stock price increases when shares are sold.  Dividends are cash flows to stockholders from the company.  These are usually determined by the board of directors.  Stock price increases are cash flows to stockholders from the stock exchange market.  They are determined by the company's performance and the sentiments of the investors in an open market with reference to the company's financial performance and position.