Question

Fernwood Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year $ 308,000 Cash dividends declared for the year 68,750 Proceeds from the sale of equipment 118,000 Gain on the sale of equipment 6,750 Cash dividends payable at the beginning of the year 30,250 Cash dividends payable at the end of the year 37,500 Net income for the year 151,250 The ending balance in retained earnings is:

Answer 1

Ending balance in retained earnings = $397,250.

Step-by-step explanation:

The opening balance in the Retained Earnings account is 308,000. which will be on the Credit side.

The following items will be credited to the account:

• Gain on the sale of equipment - 6,750
• Net income for the year - 151,250

The following item will be debited to the account:

• Cash dividend declared for the year - 68,750

Total sum of the Credit side will be 466,000. Less the sum of items on the Debit side[68,750] will result to a closing balance of 397,250.

A more visual representation is detailed in the attachment.

Answer 2

$61,500

Step-by-step explanation:

Given;

Retained earnings balance at the beginning of the year = $ 308,000

Cash dividends declared for the Year = $68,750

Cash Dividends Payable at the beginning of the Year = $30,250

Cash dividends payable at the end of the year = $37,500

Now,

The Amount of cash paid for dividends = $30,250 + $68,750 - $37,500

or

The Amount of cash paid for dividends = $61,500