The accountant for Walter Company is preparing the company's statement of cash flows for the fiscal year just ended. The followi
ng information is available: Retained earnings balance at the beginning of the year $ 129,000 Cash dividends declared for the year 49,000 Proceeds from the sale of equipment 84,000 Gain on the sale of equipment 7,600 Cash dividends payable at the beginning of the year 21,000 Cash dividends payable at the end of the year 23,600 Net income for the year 95,000 The amount of cash dividends paid during the year would be:
Equity which represents the amount owed to the owners of the business includes retained earnings (which is the accumulation of the net income/loss over the years less dividends paid) and common shares.
The movement in the retained earnings balance may be expressed as
Opening balance + net income - cash dividend paid = closing retained earnings balance
Krete would have been forced to pay a penalty only if her taxes due after withholdings were over $1,000
. Since she only owed $200 in taxes, she will not receive any penalty for underpayment. But she will still have to pay a penalty for not paying the $200 she owes (this is a separate penalty).
