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 $ 233,000 Cash dividends declared for the year 50,000 Proceeds from the sale of equipment 85,000 Gain on the sale of equipment 4,500 Cash dividends payable at the beginning of the year 22,000 Cash dividends payable at the end of the year 30,000 Net income for the year 110,000 The amount of cash paid for dividends was: Multiple Choice $52,000. $60,000. $58,000. $50,000. $42,000

Answer 1

$58,000

Step-by-step explanation:

Data given

Cash Dividends Payable at the beginning = $22,000

Cash dividends declared = $50,000

Cash dividends payable = $30,000

The computation of cash paid for dividends is shown below:-

Cash paid for dividends = Cash Dividends Payable at the beginning + Cash dividends declared - Cash dividends payable

= $22,000 + $50,000 - $30,000

= $58,000

Therefore for computing the cash paid for dividend we simply applied the above formula.