Join IDNLearn.com to access a wealth of knowledge and get your questions answered by experts. Get prompt and accurate answers to your questions from our community of experts who are always ready to help.
Sagot :
Solution:
The formula for calculating the Cash Flow to Stockholders for the year is
= Dividend Payment during the year – Change in value of Common stock during the year – Change in value of Additional paid in surplus account during the year
Where,
Change in value of Common stock during the year = Value of Common stock of the Current Year – Value of Common stock of the Previous Year
Change in value of Additional paid in surplus account during the year = Value of Additional paid in surplus account of the Current Year – Value of Additional paid in surplus account of the Previous Year
As per the Information given in the question we have
Dividend Payment during the year 2020 = $ 600,000
Value of Common stock of the Current Year i.e., 2020 = $ 630,000
Value of Common stock of the Previous Year i.e., 2019 = $ 590,000
Thus Change in Common stock during the Year = $ 630,000 - $ 590,000 = $ 40,000
Value of Additional paid in surplus account of the Current Year = $ 5,300,000
Value of Additional paid in surplus account of the Previous Year = $ 4,800,000
Thus Change in Additional paid in surplus account = $ 5,300,000 - $ 4,800,000 = $ 500,000
Thus applying the above information in the formula for calculating the Cash Flow to Stockholders is
= $ 600,000 - $ 40,000 - $ 500,000
= $ 60,000
Thus the Cash flow to stockholders for the year 2020 = $ 60,000
Thank you for using this platform to share and learn. Don't hesitate to keep asking and answering. We value every contribution you make. IDNLearn.com provides the answers you need. Thank you for visiting, and see you next time for more valuable insights.
