Question

Can you assist me with Accounting? The question comes from Understanding Financial Statements 11th ed. by Fraser and it's chapter 4, Problem 9SQP.

Accrued wages payable Interest payable Income tax payable Bonds payable Capital stock Paid-in capital Retained earnings 4.450 3.600 Total Liabilities and Equity $ 8,570 $ 7.320 Income Statement for Year Ended December 31, 2015 Sales 9.500 Cost of goods sold 6,650 Gross profit Other expenses Selling and administrative 1,200 Depreciation Interest

Answer 1

Requirement a: Compute dividend paid as follows

Particulars	Amount
Retained earnings - Beginning balance	$3,600
Add: Net income	$1,050
Deduct: Retained earnings - Ending balance	($4,450)
The amount of dividends paid	$200

Requirement b: Prepare statement of cash flows as follows

DE Inc
Statement of Cash Flows
For the Year Ended December 31, 2015
Cash flows from operating activities:	Amount	Amount
Net income	$1,050
Adjustment to reconcile net income to cash provided by operating activities:
Depreciation expense	$100
Cash provided / (used) by current assets and liabilities
Deduct: Increase in accounts receivable ($1,750 − $1,200)	($550)
Add: Decrease in inventory ($1360 − $1,250)	$110
Add: increase in accounts payable ($1,100 − $800)	$300
Deduct: Decrease in accrued wages payable ($250 − $350)	($100)
Deduct: Decrease in interest payable ($120 − $70)	($50)
Add: increase in tax payable ($200 − $50)	$150
Net cash flows from operating activities		$1,010
Cash flows from investing activities:
Plant and equipment purchased ($4,600 − $3,900)	($700)
Sale of long-term investments ($1,110 − $970)	$140
Net cash outflows from investing activities		($560)
Cash flows from financing activities:
Capital stock issued ($1,000 − $930) + ($400 − $70)	$400
Bonds repaid ($1,400 − $1,100)	($300)
Dividends paid	($200)
Net cash out flows from financing activities		($100)
Net income in cash		$350
Add: Cash - Beginning balance		$850
Cash - Ending balance		$1,200