The following account balances relate to the equity accounts of Chipo Ltd. At year-end.
2017 2016
Share capital-ordinary, 10,500 and 10,000 shares,
respectively, for 2017 and 2016.............................£155,000.......£130,000
Share capital-preference, 5,000 shares.....................125,000.........125,000
Retained earnings...............................................300,000.........250,000
A small share dividend was declared and issued in 2017. The market value of the shares was £11,200. Cash dividends were £16,000 in both 2017 and 2016. The ordinary shares have no par or stated value.
Instructions
(a) What was the amount of net income reported by Chipo Ltd. in 2017?
(b) Determine the amounts of any cash inflows or outflows related to the ordinary shares and dividend accounts in 2017.
(c) Indicate where each of the cash inflows or outflows identified in (b) would be classified on the statement of cash flows.