Question

QS 12-15 Computing financing cash flows LO P3 The following information is from Princeton Company’s comparative balance sheets. At December 31 Current Year Prior Year Common stock, $10 par value $ 111,000 $ 104,000 Paid-in capital in excess of par 571,000 344,000 Retained earnings 317,500 291,500 The company’s net income for the current year ended December 31 was $50,000. 1. Complete the T-accounts to calculate the cash received from the sale of its common stock during the current year. 2. Complete the T-account to calculate the cash paid for dividends during the current year..

Answer 1

Answer:

cash received from issuance234,000

cash used for dividends 24,000

Explanation:

Common stock           111,000    104,000

Paid -in excess of par 571,000 344,000

RE                                317,500   291,500

Common Stock   Paid-in Excess        RetainedEarnings         Cash

Debit     Credit   Debit     Credit     Debit     Credit    Debit   Credit

         104,000              344,000                291,500                7,000                                       227,000                              234,000

Balance111,000 Balance: 571,000              50,000

                                                       24,000                          24,000

                                                   Balance:  317,500

Beginning Earnings + Income - Dividends = Ending

Dividends= Beginning + Income - Ending

Dividends= 291,500 + 50,000 - 317,500 = 24,000