The following account balances relate to the stockholders’ equity accounts of Gore
Corp. at year-end.
| 2008 | 2007 | |
| Common stock, 10,500 and 10,000 shares, | ||
| respectively, for 2008 and 2007 | 160,000 | 140,000 |
| Preferred stock, 5,000 shares | 125,000 | 125,000 |
| Retained earnings | 300,000 | 260,000 |
A small stock dividend was declared and issued in 2008. The market value of the shares was
$10,500. Cash dividends were $15,000 in both 2008 and 2007. The common stock has no par or
stated value.
Instructions
(a) What was the amount of net income reported by Gore Corp. in 2008?
(b) Determine the amounts of any cash inflows or outflows related to the common stock and
dividend accounts in 2008.
(c) Indicate where each of the cash inflows or outflows identified in (b) would be classified on
the statement of cash flows.
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