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.

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Keenan Clarke

Business

29 May, 16:16

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.

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Quinton Hartman · Answer 1

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