The following account balances relate to the equity accounts of Chipo Ltd. at year-end.

A small share dividend was declared and issued in 2020. The market value of the shares was £11,200.
Cash dividends were £16,000 in both 2020 and 2019. The ordinary shares have no par or stated value.

Instructions
a. What was the amount of net income reported by Chipo Ltd. in 2020?
b. Determine the amounts of any cash inflows or outflows related to the ordinary shares and dividend accounts in 2020.
c. Indicate where each of the cash inflows or outflows identified in (b) would be classified on the statement of cash flows.

Transcribed Image Text:

2019 2020 Share capital-ordinary, 10,500 and 10,000 shares, respectively, for 2020 and 2019 Share capital-preference, 5,000 shares Retained earnings £155,000 125,000 300,000 £130,000 125,000 250,000