Dear all,
thanks to support me,
I want to know the explanation for adding (decrease in dividend payable by 5000) in RE equation for that question below.
Bertram Company had a balance of $100,000 in Retained Earnings at the beginning of the year and
$125,000 at the end of the year. Net income for this time period was $40,000. Bertram's Statement
of Financial Position indicated that Dividends Payable had decreased by $5,000 throughout the year,
despite the fact that both cash dividends and a stock dividend were declared. The amount of the
stock dividend was $8,000. When preparing its Statement of Cash Flows for the year, Bertram
should show Cash Paid for Dividends as
a. $20,000.
b. $15,000.
c. $12,000.
d. $5,000
Correct answer c. Bertram's Cash Paid for Dividends is $12,000 as calculated below.
$100,000 + $40,000 - $8,000 + $5,000 – X = $125,000
$137,000 – X = $125,000
X = $12,000
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