The following selected account balances relate to the shareholders' equity accounts of Mathur Corp. at year end:
_______________________________________________________2018 2017
Preferred shares, 6,000 shares in 2018, 5,000 shares in 2017.........$150,000........$125,000
Common shares, 18,700 shares in 2018, 20,000 in 2017..................190,400..........200,000
Retained earnings..............................................................................259,600..........250,000
Cash dividends-preferred...................................................................7,500..............6,250
Stock dividends-common shares......................................................20,400..................-0-
Additional information:
1. During 2018, the company sold 1,000 preferred shares. No shares were reacquired by the company.
2. All cash dividends pertained to the preferred shares and were declared and paid during the same year. There were no dividends payable at the end of 2017 or 2018.
3. At the beginning of the year, 3,000 common shares were bought back and retired at a price of $10 per share. Later in the year, a 10% stock dividend was declared and distributed when the fair value of the shares was $12 per share.
4. Net income was $37,500 in 2018.
Instructions
(a) Determine the amounts of any cash receipts or payments related to the shareholders' equity accounts in 2018.
(b) Indicate where each of the cash receipts or payments identified in part (a) would be classified on the statement of cash flows or accompanying notes.
(c) Would you expect a growing company like Mathur to be generating or using cash for its financing activities? Explain.