Question

The 2017 balance sheet of Kerber’s Tennis Shop, Inc., showed $500,000 in the common stock account and $3.3 million in the additional paid-in surplus account. The 2018 balance sheet showed $540,000 and $3.5 million in the same two accounts, respectively. If the company paid out $305,000 in cash dividends during 2018, what was the cash flow to stockholders for the year? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)

Answer 1

Answer:Cash flow for share holders=$65,000

Step-by-step explanation:

Cash flow for share holders = Dividends paid -Net equity

Dividend paid- [(Common sto end + Additional Paid in Surplus end)]- [(Common beg+APIS beg)]

Dividend paid -{( Ending common stock +Ending paid in capital) -( beginning common stock +beginning paid in capital }

$305,000- ($540,000+$3,500,000)- ($500,000 +$3,300,000)

=$305,000-{(4,040,000)- ($3,800,000}

$305,000 - $240,000

=$65,000