Question

Determining Cash Flows from Financing Activities Nichols Inc. reported the following amounts on its balance sheet at the end of 2019 and 2018 for equity: 12/31/2019 12/31/2018 Common stock $164,000 $105,000 Retained earnings 455,490 376,750 Required: Assume that Nichols did not retire any stock during 2019, it reported $96,100 of net income for 2019, and any dividends declared were paid in cash. Determine the amounts Nichols would report in the financing section of the statement of cash flows.

Answer 1

Step-by-step explanation:

First of all we will perpare the T-Accounts for the identification of shares issued and dividend paid during the year as follows :

Share Capital And premium Account

Opening Balance -105000

Closing Balance 164000

Shares Issued 59000

Retained Earnings

Opening Balnce 376750

Net Income During the Year 96100

Closing Balance -455490

Dividend Paid Balancing figure 17360

Now We will Draft the inancing section of the statement of cash flows.

Cash flow from investing Activities

Issuance of shares 59000

Dividend Paid -17360

Net cash from finance activity 41640