P4-7 Statement of cash flows Below we reproduce the stockholders' equity section of the 2019 and 2018 balance sheets for Baker Corporation, which also appear as part of Table 4.5. Account Preferred stock Common stock (par) Paid-in capital Retained earnings Total stockholders' equity 2019 $ 100 120 380 600 1,200 2018 $100 120 380 500 1,100 a. The Baker Corporation statement of cash flows in Table 4.6 shows a $0 cash inflow resulting from changes in stockholders' equity, yet the balance sheet shows that stockholders' equity increased by $100 in 2019. Can you explain this apparent contradiction? b. Will the statement of cash flows for Baker Corporation show a $0 cash inflow resulting from the change in stockholders' equity every year, or are other values possible? Explain how Baker's statement of cash flows could show a positive cash inflow resulting from a change in stockholders' equity in some future year?
P4-7 Statement of cash flows Below we reproduce the stockholders' equity section of the 2019 and 2018 balance sheets for Baker Corporation, which also appear as part of Table 4.5. Account Preferred stock Common stock (par) Paid-in capital Retained earnings Total stockholders' equity 2019 $ 100 120 380 600 1,200 2018 $100 120 380 500 1,100 a. The Baker Corporation statement of cash flows in Table 4.6 shows a $0 cash inflow resulting from changes in stockholders' equity, yet the balance sheet shows that stockholders' equity increased by $100 in 2019. Can you explain this apparent contradiction? b. Will the statement of cash flows for Baker Corporation show a $0 cash inflow resulting from the change in stockholders' equity every year, or are other values possible? Explain how Baker's statement of cash flows could show a positive cash inflow resulting from a change in stockholders' equity in some future year?
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter16: Statement Of Cash Flows: Another Look
Section: Chapter Questions
Problem 10P
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