CMA Study Group

CMA Part 1_Cash dividends

  • 1.  CMA Part 1_Cash dividends

    Posted 22 days ago

    Hi All,

    Could anyone explain why the answer of the following question is $12,000?
    Upon the answer, the formula is as below, but i do not understand why $5,000 was added..

    $100,000 + $40,000 - $8,000 + $5,000 X
    = $137,000
    X
     X =
    $12,000


    Thanks,
    SH



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    Sunhye Lee
    Controller
    Seoul
    Korea, Republic of
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  • 2.  RE: CMA Part 1_Cash dividends

    Posted 22 days ago
    Two things that needs to be considered
    Retained Earning
    Dividend Payable

    Dividend Payable is what company has already declared to be paid but not yet paid and its a part of current liability.
    Retained Earning was $100,000 in the beginning of the year and Net Income was $40,000 so retained earning should have been $140000 at the end of the year but it is standing at $125000. The difference of 15000 should be dividend paid. Dividend payable was reduced by $ 5000 so total dividend paid was $20,000 out of which $8000 was paid as stock dividend and so cash dividend is (20,000 - 8000) = $12000.

    Hope this helped.

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    Kirti Sheth
    None
    SINGAPORE
    Singapore
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  • 3.  RE: CMA Part 1_Cash dividends

    Posted 22 days ago
    B 100
    A 40
    S
    E 125

    S 5000
    A 15000
    S 12000
    1. E 8000


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    GEZOULI ELTAYEB ALI
    Accountant
    Riyadh
    Saudi Arabia
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  • 4.  RE: CMA Part 1_Cash dividends

    Posted 22 days ago
    First note: Stock dividends declared don't affect the dividends payable account.

    In retained earnings account balancing figure is Dividends declared:

    From the given balances Dividends declared during the year are 15000  ( 100000 op. b/l + 40000 net income - 125000 closing balance).

    (1)Dividends payable Account was decreased by 5000 it implies cash dividend paid was 5000.

    (2)From the above Dividends declared (15000),
        8000 was stock dividends so the remaining balance is cash dividends 7000.

    Here in this question asking for cash paid for dividends so we are adding 5000 (1)  and 7000 (2) =   12000

    I hope this helps.


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    Akhileswar Parmanchala
    Student
    Kurnool
    India
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  • 5.  RE: CMA Part 1_Cash dividends

    Posted 22 days ago
    This $5,000 were already in the dividend payable so they they was declared earlier and now they was paid and decreased the dividends payable account so they must be added to arrive at the cash dividends paid.

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    Abdelmonem Hemdan Morsy
    Student
    Menoufia Governorate
    Egypt
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  • 6.  RE: CMA Part 1_Cash dividends

    Posted 22 days ago
    Please find below given calculation:

    The amount of total dividends declared during the year can be calculated as follows:
    Beginning retained earnings........................................................ $100,000
    Net income for the year.............................................................. 40,000
    Ending retained earnings............................................................. (125,000)
    Dividends declared during the year..............................................$ 15,000
    Since $8,000 is the amount of stock dividends declared, the amount of cash dividends declared this year is $7,000 ($15,000 - $8,000).  

    The amount of cash dividends paid during the year can be calculated as follows:
    Decrease in the cash dividends payable account during the period ...........$ 5,000
    Cash dividends declared during the year................................................ 7,000
    Cash paid for dividends during the year................................................ $12,000
    Stock dividends declared does not affect the dividends payable account. 



    Thanks and regards.


    Dinesh Kumar.T

    Dubai,

    United Arab Emirates

    Mail to: dineshkumar.t@...

    T +971 4 805 3820

    F+971 4 8053701

    M+971 50 6582402






  • 7.  RE: CMA Part 1_Cash dividends

    Posted 22 days ago
    Please find below given calculation:

    Total dividends declared to be calculated as follows:
    Opening retained earnings........................................................ $100,000
    Net income for the year.............................................................. 40,000
    Closing retained earnings............................................................. (125,000)
    Dividends declared during the year..............................................$ 15,000
    Since $8,000 is the amount of stock dividends declared, the amount of cash dividends declared this year is $7,000 ($15,000 - $8,000).

    The amount of cash dividends paid during the year can be calculated as follows:
    Decrease in the cash dividends payable account during the period ...........$ 5,000
    Cash dividends declared during the year................................................ 7,000
    Cash paid for dividends during the year................................................ $12,000
    Stock dividends declared does not affect the dividends payable account.



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    Dinesh Thazhathidam
    Director/Manager
    DUBAI
    United Arab Emirates
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  • 8.  RE: CMA Part 1_Cash dividends

    Posted 20 days ago
    I hope this will help



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    Phuc
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  • 9.  RE: CMA Part 1_Cash dividends

    Posted 20 days ago
    Keep it simple. If you got to 7,000 then your roll up is good for current year cash dividends paid. The additional 5,000 is for cash paid for prior period dividends (which sit in your Payables balance). Thats all it is. The question asks total cash dividends paid in this fiscal cycle - that includes any current period distribution and any dividends outstanding from previous periods.

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    Nozim Lutfullaev
    Director/Manager
    Dubai
    United Arab Emirates
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  • 10.  RE: CMA Part 1_Cash dividends

    Posted yesterday

    RE 

    beg is 100,000

    +net income 40000

    -Stock Dividend declared (8000)

    ------------------------------------------
    Ending RE = 125000
    in question there is paid 5000 + 7000(132000-125000)= 12000



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    Ibrahim Ellafy
    Accountant
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  • 11.  RE: CMA Part 1_Cash dividends

    Posted 21 days ago
    Personally, I am not sure if this answer is correct or not, but I say thank you for trying

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    GEZOULI ELTAYEB ALI
    Accountant
    Riyadh
    Saudi Arabia
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