In: Accounting
Selected accounts from the SFP of Passen Ltd. at 31 December 20X8 and 20X7 are presented below. Passen reported earnings of $100,000 in 20X8. There was a stock dividend recorded, valued at $50,000 that reduced retained earnings and increased common shares.
There was also a cash dividend declared and common shares issued for cash.
Required:
List the items that would be included in the SCF from these accounts for 20X8. Include the appropriate section (operating, investing, or financing). Use the indirect method of presentation in the operating activities section. List the non-cash item disclosure. Make logical assumptions about unexplained changes in accounts.
Operating activities – net earnings....................................................................... $ 100,000
Financing activities – issuance of bonds payable ............................................... 400,000
Financing activities - cash received for common shares
$100,000 + $50,000 = $150,000 versus $400,000............................................ 250,000
Financing activities - cash paid for dividends
($250,000 + $100,000 - $50,000 = $300,000 versus $225,000; $75,000
of dividends, less $8,000 change in dividends payable account).................. (67,000)
Disclosure note: stock dividend valued at $50,000
Disclosure note: stock dividend valued at $50,000