Question

Pay cash dividends to stockholders for $60,000 1. How would this impact net income? state increase...

Pay cash dividends to stockholders for $60,000

1. How would this impact net income? state increase or decrease and amount or NA (example: increase 10,000)

2. How would this impact the cash (bank) account? state increase or decrease and amount or NA  (example: decrease 10,000)

3. What type of cash flow activity would it be on the cash flow statement? put OA, IA, FA, or NA  (example: OA)

  • OA= operating activity
  • IA= investing activity
  • FA=financing activity
  • NA= not applicable

Homework Answers

Answer #1

Solution:

The entry would be:

Cash Dividends $ 60,000
To Bank account $ 60,000

Answer 1: NA

Explanation:

Cash dividend does not impact the Net Income of an organisation because cash dividend is paid out of Net Income.

Answer 2: Decrease $ 60,000

Explanation:

Paying cash dividend to stockholders reduces bank account, and so bank will be reduced by $ 60,000.

Answer 3: FA=financing activity

Explanation:

Financing activities are those activities that are related to procurement or acquisition of funds.

These are those activities that are related to debt and equity.

Therefore, payment of cash dividend is related to Financing Activity.

In case of any doubt or clarification, feel free to come back via comments.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
ABC company recorded wages payable of $15,000 for work performed by employees at the end of...
ABC company recorded wages payable of $15,000 for work performed by employees at the end of April that will be paid in May. Record the April transaction. 1. How would this impact net income? state increase or decrease and amount or NA (example: increase 10,000) 2. How would this impact the cash (bank) account? state increase or decrease and amount or NA  (example: decrease 10,000) 3. What type of cash flow activity would it be on the cash flow statement? put...
Statement of Cash Flows Amount OA, IA, or FA (for extra credit only) Accounts payable increase...
Statement of Cash Flows Amount OA, IA, or FA (for extra credit only) Accounts payable increase $ 9,000 Accounts receivable increase     4,000 Salaries payable decrease     3,000 Amortization expense     6,000 Cash balance, January 1    22,000 Cash balance, December 31    15,000 Cash paid as dividends    29,000 Cash paid to purchase land    90,000 Cash paid to retire bonds payable at par    60,000 Cash received from issuance of common stock    35,000 Cash received from sale...
Beacon Corporation issued a 7 percent stock dividend on 27,500 shares of its $7 par common...
Beacon Corporation issued a 7 percent stock dividend on 27,500 shares of its $7 par common stock. At the time of the dividend, the market value of the stock was $30 per share. Required a. Compute the amount of the stock dividend. Stock dividend Show the effects of the stock dividend on the financial statements using a horizontal statements model. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity...
Patel Service Co. does make a few sales on account but is mostly a cash business....
Patel Service Co. does make a few sales on account but is mostly a cash business. Consequently, it uses the direct write-off method to account for uncollectible accounts. During Year 1, Patel Service Co. earned $31,200 of cash revenue and $7,800 of revenue on account. Cash operating expenses were $29,756. After numerous attempts to collect a $256 account receivable from Sam Stephens, the account was determined to be uncollectible in Year 1. Required: a. Show the effects of (1) cash...
Diaz Company issued bonds with a $127,000 face value on January 1, Year 1. The bonds...
Diaz Company issued bonds with a $127,000 face value on January 1, Year 1. The bonds had a 7 percent stated rate of interest and a 10-year term. Interest is paid in cash annually, beginning December 31, Year 1. The bonds were issued at 97. The straight-line method is used for amortization. Requireda. Use a financial statements model like the one shown next to demonstrate how (1) the January 1, Year 1, bond issue and (2) the December 31, Year...
Fresh Foods established a petty cash fund of $275 on January 2. On January 31, the...
Fresh Foods established a petty cash fund of $275 on January 2. On January 31, the fund contained cash of $72.25 and vouchers for the following cash payments:      Maintenance expense $ 82.25   Office supplies 84.80   Transportation expense 32.50 The three distinct accounting events affecting the petty cash fund for the period were (1) establishment of the fund, (2) reimbursements made to employees, and (3) recognition of expenses and replenishment of the fund. 1. value: 10.00 points Required information Required...
Bill Darby started Darby Company on January 1, Year 1. The company experienced the following events...
Bill Darby started Darby Company on January 1, Year 1. The company experienced the following events during its first year of operation: 1. Earned $1,200 of cash revenue. 2. Borrowed $2,100 cash from the bank. 3. Adjusted the accounting records to recognize accrued interest expense on the bank note. The note, issued on September 1, Year 1, had a one-year term and an 6 percent annual interest rate. Required: a. What is the amount of interest payable at December 31,...
The following items involve the cash flow activities of Prizzie Company for 2020: Net income $162,000...
The following items involve the cash flow activities of Prizzie Company for 2020: Net income $162,000 Payment of dividends 25,000 1,000 shares of stock issued at $20 par 20,000 Amortization expense on patents 7,000 Plant assets acquired at a cost of 75,000 Accounts receivable increase of 9,000 Accounts payable decrease of 10,000 Salaries payable increase of 6,500 Beginning cash balance 18,000 Required: Prepare the statement of cash flows of Prizzie Company for 2020 using the indirect method. Labels Financing Activities...
Han’s Supplies’ bank statement contained a $180 NSF check that one of its customers had written...
Han’s Supplies’ bank statement contained a $180 NSF check that one of its customers had written to pay for supplies purchased. Required a. Show the effects of recognizing the NSF check on the financial statements by recording the appropriate amounts in a horizontal statements model like the following one: (In the Cash Flow column, use the initials OA to designate operating activity, IA for investing activity, FA for financing activity and NA to indicate the element is not affected by...
Newly formed S&J Iron Corporation has 103,000 shares of $5 par common stock authorized. On March...
Newly formed S&J Iron Corporation has 103,000 shares of $5 par common stock authorized. On March 1, Year 1, S&J Iron issued 9,500 shares of the stock for $12 per share. On May 2, the company issued an additional 24,000 shares for $21 per share. S&J Iron was not affected by other events during Year 1. Required a. Record the transactions in a horizontal statements model. In the Cash Flow column, indicate whether the item is an operating activity (OA),...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT