The 2018 statement of cash flows of Dickens Corporation shows $500,000 cash paid for dividends.If dividends in Dickens' statement of retained earnings are reported at $550,000 then:

Question

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The statement of retained earnings reports the beginning balance of retained earnings, plus net income, minus dividends, to arrive at the ending balance. If the statement of cash flows shows $500,000 cash paid for dividends, but the statement of retained earnings shows dividends of $550,000, then the difference of $50,000 must have been added to the dividends payable account. Therefore, the dividends payable account must have increased by $50,000 in 2018.

The 2018 Statement of Cash Flows of Dickens Corporation Shows