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Jones Inc. recognized the following balances in its financial records: Account Dec. 31, 2019 Dec. 31,...

Jones Inc. recognized the following balances in its financial records:

Account Dec. 31, 2019 Dec. 31, 2020
Dividends payable $40,000 $10,000
Retained earnings 200,000 275,000


Jones Inc. reported net income of $155,000 in 2020. Based on this information, what is the effect on the financing activities section of the statement of cash flows?

Select one:

a. Cash outflow of $80,000

b. Cash outflow of $110,000

c. Cash outflow of $50,000

d. Cash outflow of $30,000

Business   Accounting   
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Answer #1
Retained Earning 2019 $       2,00,000
Add: Net Income $       1,55,000
Less:
Retained Earning 2020 $       2,75,000
Dividend Declared $           80,000
Calculation of dividend paid
Dividend payable 2019 $           40,000
Add:
Dividend Declared $           80,000
Less:
Dividend payable 2020 $           10,000
Dividend cash paid $       1,10,000
Correct Option :b. Cash outflow of $110,000
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