Question

The December 31, 2018, balance sheet of Whelan, Inc., showed $136,000 in the common stock account and $2,610,000 in the additional paid-in surplus account. The December 31, 2019, balance sheet showed $146,000 and $2,910,000 in the same two accounts, respectively. The company paid out $141,000 in cash dividends during 2019.
Required:

What was the cash flow to stockholders for the year?

Answer 1

Answer:

$169,000 negative

Explanation:

Equity = Common stock + Additional paid in surplus

Total equity at beginning= Common stock + Additional paid in surplus

=136,000+2,610,000=$2,746,000

Total equity at end= Common stock + Additional paid in surplus

=146,000+2,910,00)=$3,056,000

Hence new equity = Total equity at End - Total equity at beginning

3,056,000-2,746,000=$310,000

Cash flow to stockholders = Dividends paid - New equity

= 141,000-310,000

= -169,000

=$169,000 negative