Chapter 13, Problem 13.2AP

The following account balances relate to the stockholders' equity accounts of Kerbs Corp. at year-end.

	2017	2016
Common stock, 10,500 and 10,000 shares, respectively, for 2017 and 2016	$170,000	$140,000
Preferred stock. 5,000 shares	125,000	125,000
Retained earnings	300,000	250,000

Determine cash flow effects of changes in equity accounts.

(LO 2), AN

A small stock dividend was declared and issued in 2017. The market value of the shares was $10,500. Cash dividends were $15,000 in both 2017 and 2016. The common stock has no par or stated value.

(a) Net Income $75,500

Instructions

(a) What was the amount of net income reported by Kerbs Corp. in 2017?

(b) Determine the amounts of any cash inflows or outflows related to the common stock and dividend accounts in 2017.

(c) Indicate where each of the cash inflows or outflows identified in (b) would be classified on the statement of cash flows.