CMA Study Group

  • 1.  need help

    Posted 27 days ago

    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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