Financial Accounting: An Integrated Statements Approach, 2nd Edition

Chapter 13 Statement of Cash Flows 589

The $24,000 of dividend payments represents a cash outflow that is reported in the
financing activities section as follows:

Cash flows from financing activities:

Cash paid for dividends $24,000

For some mature companies, cash outflows for dividends can be significant. For
example, in a recent year Bank of America Corp.paid over $4.3 billion in dividends,
which was equal to 18% of cash flows from operations.

Common Stock

The common stock account increased by $8,000, and the paid-in capital in excess of
par–common stock account increased by $40,000, as shown below. These increases re-
sulted from issuing 4,000 shares of common stock for $12 per share.

This cash inflow is reported in the financing activities section, as follows:

Cash flows from financing activities:

Cash received from sale of common stock $48,000

Bonds Payable

The bonds payable account decreased by $50,000, as shown below. This decrease resulted
from retiring the bonds by a cash payment for their face amount.

This cash outflow is reported in the financing activities section, as follows:

Cash flows from financing activities:

Cash paid to retire bonds payable $50,000

Building

The building account increased by $60,000, and the accumulated depreciation—
building account increased by $7,000, as shown on the next page.

COMMON STOCK

Jan. 1 Balance 16,000

Nov. 1 4,000 shares issued

for cash 8,000

Dec. 31 Balance 24,000

PAID-IN CAPITAL IN EXCESS OF PAR

Jan. 1 Balance 80,000

Nov. 1 4,000 shares issued

for cash 40,000

Dec. 31 Balance 120,000

BONDS PAYABLE

June 30 Retired by payment of
cash at face amount 50,000 Jan. 1 Balance 150,000
Dec. 31 Balance 100,000