Final answer:
Fuller Company should report dividends paid of $30,000 under financing activities in the statement of cash flows, assuming no other information is present. The firm's accounting profit from the self-check question is $50,000. For the bank, the net worth is calculated as $220.
Step-by-step explanation:
The student's question pertains to how to report changes in retained earnings in the statement of cash flows for Fuller Company. If retained earnings increased by $20,000 and the net income for the year was $50,000, one has to account for the fact that retained earnings can increase from net income and decrease due to dividends paid to shareholders. Since no other information is given, such as dividends distributed, one can assume that the difference between the net income and the increase in retained earnings may be due to dividends paid. Therefore, if retained earnings increased by $20,000 and net income was $50,000, the company must have paid out $30,000 in dividends ($50,000 net income - $20,000 increase in retained earnings = $30,000). This dividends paid amount would likely be reported under financing activities in the statement of cash flows as a cash outflow.
As for the self-check questions: the accounting profit can be calculated by subtracting the total costs from the sales revenue. If a firm had sales revenue of $1 million, and total costs for labor, capital, and materials were $600,000 + $150,000 + $200,000 = $950,000, then its accounting profit would be $1 million - $950,000 = $50,000.
For the T-account balance sheet of the bank, the assets would include reserves ($50), government bonds ($70), and loans ($500), totaling $620 in assets. The liabilities would be the deposits ($400). To calculate the net worth, subtract total liabilities from total assets. So, the bank's net worth would be $620 - $400 = $220.