P12-2A The following account balances relate to the stockholders’ equity accounts of Patil Corp. at year-end.
2012 2011
Common stock, 10,500 and 10,000 shares, respectively, for 2012 and 2011 $160,800 $140,000
Preferred stock, 5,000 shares 125,000 125,000
Retained earnings 300,000 270,000
A small stock dividend was declared and issued in 2012. The market value of the shares was $8,800. Cash dividends were $20,000 in both 2012 and 2011. The common stock has no par or stated value.
Determine cash flow effects of changes in equity accounts.
Instructions
a. What was the amount of net income reported by Patil Corp. in 2012?
b. Determine the amounts of any cash inflows or outflows related to the common stock and dividend accounts in 2012.
c. Indicate where each of the cash inflows or outflows identified in (b) would be classified on the statement of cash flows.
Check: (a) Net income $58,800
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