### Financial Statement Analysis: Dividend Declaration**Scenario:**On April 1, Year 1, Exotic Motor Cars Incorporated declared a $136,000 cash dividend to be paid on April 30 to shareholders of record on April 15.**Objective:**Record the events occurring on April 1, April 15, and April 30 using a horizontal statements model. For the Statement of Cash Flows column, indicate if the item is an operating activity (OA), investing activity (IA), or financing activity (FA).**Instructions:**Enter any decreases to account balances and cash outflows with a minus sign. Leave cells blank if no input is needed.---**Table Overview:**The table spans three primary financial statements: Balance Sheet, Income Statement, and Statement of Cash Flows.1. **Balance Sheet:** Includes Assets, Liabilities, Common Stock, and Retained Earnings.2. **Income Statement:** Includes Revenue, Expenses, and Net Income.3. **Statement of Cash Flows:** To categorize the nature of cash flows.**Columns and Entries:**- **Date:** Lists April 1, April 15, and April 30 as key dates.- For each date, record transactions affecting: - **Assets:** Changes in company resources. - **Liabilities:** Changes in company obligations. - **Common Stock & Retained Earnings:** Changes reflecting shareholder equity. - **Revenue, Expenses, Net Income:** Affect profitability. - **Statement of Cash Flows:** Classify as OA, IA, or FA.**Note:** Leave cells blank if no transactions occur on specific dates.

Basic accounting equation is Total assets = Total liabilities + Stock holders equityCash flow from operating activities is cash inflows and cash outflows from day to day business operations. Cash flows from investing activities is cash inflows and outflows from investments made, lending money, sale of investments etc... by organization Cash flow from financing activities is cash raised to fund company and cash used to distribute to stockholders. On date of payment of dividend cash balance reduces( which is an current asset) and liability which is created previously is to be reversed. Thus on date of payment it is considered as cash flow from financial activities.Horizontal statement modelDateAssets=Liabilities +Common stock+Reained earnings Revenue - Expenses=Net income statement of cash flows April 01$136,000+$136,000April 1500000000April 30-$136,000-$136,000-$136,000 FAThus payment of dividends is cash outflows from financial activities. = $136,000

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Accounting

On April 1, Year 1, Exotic Motor Cars Incorporated declared a $136,000 cash dividend to be paid on April 30 to shareholders of record on April 15. Required: Record the events occurring on April 1, April 15, and April 30 in a horizontal statements model. In the Statement of Cash Flows column. indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Note: Enter any decreases to account balances and cash outflows with a minus sign. Leave cells blank if no input is needed. Date April 1 April 15 April 30 Assets = Balance Sheet Liabilities + Common Stock + Retained Earnings Revenue Income Statement Expenses = = Net Income Statement of Cash Flows

On April 1, Year 1, Exotic Motor Cars Incorporated declared a $136,000 cash dividend to be paid on April 30 to shareholders of record on April 15. Required: Record the events occurring on April 1, April 15, and April 30 in a horizontal statements model. In the Statement of Cash Flows column. indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Note: Enter any decreases to account balances and cash outflows with a minus sign. Leave cells blank if no input is needed. Date April 1 April 15 April 30 Assets = Balance Sheet Liabilities + Common Stock + Retained Earnings Revenue Income Statement Expenses = = Net Income Statement of Cash Flows

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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