Question

JAJ Incorporated reported a balance in retained earnings of \$26,571 million at the beginning of the year and \$28,132 million at the end of the year. Its dividends payable account increased by \$233 million during the year. It reported net income for the year of \$5,030 million. How much cash did JAJ disburse for dividends during the year? Indicate where this information would appear in the simplified statement of cash flows in Exhibit 6.12.
Exhibit 6.12.
OPERATIONS
Cash Receipts from Customers . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . (1)
Less: Cash Payments to Suppliers, Employees, and Others. . . . . . . . . . −(2)
Cash Flow from Operations [= (1) – (2)]. . . . . . . . . . . . . . . . . . . . . . . . . −S1
Reconciliation of Net Income to Cash Flow from Operations
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3)
Additions to Net Income to Compute Cash Flow from Operations .. . . . . +(4)
Subtractions from Net Income to Compute Cash Flow from Operations . −(5)
Cash Flow from Operations [= (3) + (4) – (5)] . . . . . . . . . . . . . . . . . . . . . . . S1
INVESTING
Proceeds from Dispositions of “Investing” Assets . . . . . . . . . . . . . . . . . . . +(6)
Cash Used to Acquire “Investing” Assets. . . . . . . . . . . . . . . . . . . . . . . . . . −(7)
Cash Flow from Investing [= (6) – (7)] . . . . . . . . . . . . . . . . . . . . . . . . . . .. . S2
FINANCING
Cash Provided by Increases in Debt or Capital Stock . . . . . . . . . . . . . . .. . +(8)
Cash Used to Reduce Debt or Capital Stock . . . . . . . . . . . . . . . . . . . . . . . −(9)
Cash Used for Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . −(10)
Cash Flow from Financing [= (8) – (9) – (10)] . . . . . . . . . . . . . . . . . . . . . . S3
Net Change in Cash [= S1 + S2 + S3]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11)
Cash, Beginning of the Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . S4
Cash, End of the Period [= (11) + S4] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S5

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