The following account balances relate to the stockholders' equity accounts of Kerbs Corp. at year-end. 2020 2019
Common stock, 10,500 and 10,000 shares respectively, for 2020 and 2019 157,100 $137,800
Preferred stock, 5,000 shares 92,400 92,400
Retained earnings 299,800 248,500

A small stock dividend was declared and issued in 2020. The result of the stock dividend was to decrease retained earnings by $11,300 and increase common stock by $11,300. Cash dividends were $17,000 in both 2020 and 2019. The common stock has no par or stated value.

Required:
a. What was the amount of net income reported by Kerbs Corp. in 2020
b. Determine the amounts of any cash inflows or outfiows related to the common stock and dividend accounts in 2020

a)  The amount of net income reported by Kerbs Corp. in 2020 is $299,800

b) Dividend = $17,000 ( Cash outflow from financial activities)

Common stock = $8,000 ( Cash inflow from financial activities)

Explanation:

                                                    2020                      2019

Common stock,                         10,500 shares     10,000 shares

                                                   $157,100                   $137,800

Preferred stock, 5,000 shares  $92,400                    $92,400

Retained earnings                      $299,800               $248,500

a) Total amount of net income reported by Kerbs Corp. in 2020

= Retained earnings by the beginning of the year + Net income - cash dividend - stock dividend

Calculation of net income = Closing retained earnings + dividends - openind retained earnings

= $299,800 + ($11,300 + $17000) - $248,500

= $79,600

= $248,500 + $79,600 - $11,300 - $17,000

= $299,800

b) Determine the amounts of any cash inflows or outflows related to the common stock and dividend accounts in 2020

Inflow to common stocks = opening common stock - closing common stock - stock dividend

= $157,100 - $137,800 - $11,300

= $8,000

Dividend = $17,000 ( Cash outflow due to dividend)

a is the correct answer, tell me if im right

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