Who Knows Accounting?
#1
I am trying to use the indirect method on a statement of cash flows and I don't understand what to do with a cash dividend declared for $112,320. I am in the financing activities and the question asks me to enter less cash paid for dividends and I am not understanding this at all.
I am in accounting I and struggling with this problem. Can anyone help me?
Thanks :D
I am in accounting I and struggling with this problem. Can anyone help me?
Thanks :D
#4
Banned
Join Date: Nov 2010
Posts: 4,134
Originally Posted by Lneal
I am trying to use the indirect method on a statement of cash flows and I don't understand what to do with a cash dividend declared for $112,320. I am in the financing activities and the question asks me to enter less cash paid for dividends and I am not understanding this at all.
Did it?
What would the JE have been when the dividend was declared?
Dr. R/E (or a sub account)
Cr. Dividends Payable
How did you account for the Dividend Payable credit in Curr Liab?
#5
Not sure I am understanding the question but if someone is paid a cash dividend, then the JE would be to credit cash and debit the dividends. In return it will show on the balance sheet depreciating the retained earnings of a company because a portion of the profits have been paid out.
Hope I am understanding the question right, good luck.
Hope I am understanding the question right, good luck.
#6
Banned
Join Date: Nov 2010
Posts: 4,134
Originally Posted by RenaB
Not sure I am understanding the question but if someone is paid a cash dividend, then the JE would be to credit cash and debit the dividends. In return it will show on the balance sheet depreciating the retained earnings of a company because a portion of the profits have been paid out.
Hope I am understanding the question right, good luck.
Hope I am understanding the question right, good luck.
#7
Super Member
Join Date: Dec 2010
Posts: 1,232
OK, I'm assuming the dividend was paid. I think you just enter it as a negative number. For a very simplified example, suppose your net income is $1,000, and it's all cash related - no depreciation, or other non cash items. Also, assume you started the year with $100 cash, and paid a cash dividend of $50.
Net Income = 1,000
Financing Activities
Cash Dividend paid = -50.00
Change in Cash for period = 950.00
Cash at beginning of year = 100.00
Cash at end of year = 1050.
Maybe????
Net Income = 1,000
Financing Activities
Cash Dividend paid = -50.00
Change in Cash for period = 950.00
Cash at beginning of year = 100.00
Cash at end of year = 1050.
Maybe????
#8
Originally Posted by MTS
Originally Posted by RenaB
Not sure I am understanding the question but if someone is paid a cash dividend, then the JE would be to credit cash and debit the dividends. In return it will show on the balance sheet depreciating the retained earnings of a company because a portion of the profits have been paid out.
Hope I am understanding the question right, good luck.
Hope I am understanding the question right, good luck.
#9
Banned
Join Date: Nov 2010
Posts: 4,134
Originally Posted by RenaB
Originally Posted by MTS
Once again, DECLARED is not PAID.
And I think the funky wording is intentional. ;-)
iow, you would put in the amount paid out in cash for dividends.
If there were any. ;-)
At least that's the way I'm reading it.
A Declared Dividend would have no effect on cash flow as no cash went out the door.
Yet.
If you didn't adjust for the Dividends Payable on your cash flow statement, then you wouldn't have to for the hit to Dividends Declared or R/E acct (depending on how it was booked in the R/E section).
#10
The problem says ; An examination of the income statement and the accounting records revealed the following additional information applicable to 2013:
On the statement of cash flows indirect method these numbers are entered for the liabilities and stockholders equity. Dec 31, 2013 $28,080 .......... Dec 31 2012 $21,600
Then I am given Cash dividends declared, $112,320 as the additional information.
When doing my cash flows from financial activities I don't know how to enter the amount for less cash paid for dividends.
I hope I am making sense and sorry if I am not. This is so new to me.
On the statement of cash flows indirect method these numbers are entered for the liabilities and stockholders equity. Dec 31, 2013 $28,080 .......... Dec 31 2012 $21,600
Then I am given Cash dividends declared, $112,320 as the additional information.
When doing my cash flows from financial activities I don't know how to enter the amount for less cash paid for dividends.
I hope I am making sense and sorry if I am not. This is so new to me.
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