Fernwood Company is preparing the company's statement of cash flows for the fiscal year just ended. The following information is available: Retained earnings balance at the beginning of the year $233,000 Cash dividends declared for the year 50,000
Proceeds from the sale of equipment 85,000 Gain on the sale of equipment 4,500
Cash dividends payable at the beginning of the year 22,000 Cash dividends payable at the end of the year 30,000 Net income for the year 110,000

Question

Quizplus · Accepted Answer

The ending retained earnings can be calculated as: Beginning retained earnings ($233,000) + Net income ($110,000) - Cash dividends paid ($42,000). Cash dividends paid is calculated as: Cash dividends declared ($50,000) + Beginning dividends payable ($22,000) - Ending dividends payable ($30,000) = $42,000. Therefore, ending retained earnings = $233,000 + $110,000 - $42,000 = $301,000.

Fernwood Company Is Preparing the Company's Statement of Cash Flows