Question

The December 31, 2015, balance sheet of Schism, Inc., showed $141,000 in the common stock account and $2,660,000 in the additional paid-in surplus account. The December 31, 2016, balance sheet showed $151,000 and $2,960,000 in the same two accounts, respectively. The company paid out $146,000 in cash dividends during 2016. What was the cash flow to stockholders for the year?

Answer 1

Answer:

cash flow: negative 170,000

Explanation:

The stockhodlers cashflow will be the result of compare the cash inflows and cash outflows.

To Calculate this, we will treat the dividend and treasury stocks as cash inflow(remember we are checking from the point of view of the stockholders) as they rgant cash to the stockholders.

Then the stock isued will be treat as negative, as it is a cash outflow for the stockholders.

paid in capital 2015:

141,000 + 2,660,000 = 2,801,000

paid in capital 2016:

151,000 + 2,960,000 = 3,111,000

Difference (issued shares)

3,111,000 - 2,801,000 = 310,000

The stockholders contribute with 310,000 dollas

dividends paid: 146,000

net cash flow:

140,000 - 310,000 = 170,000