Question

What is reported on the statement of cash flows prepared with the indirect method for the year ended December 31, 2020? Assume there were no retirements of common stock or additional purchases of Treasury Stock during 2020. No dividends were declared in 2020.

(A) Financing Activity of $144,000
(B) Operating Activity $16,000
(C) Financing Activity of $161,000
(D) B and C

Answer 1

Answer:

(C) Financing Activity of $161,000

Explanation:

Financing activities: It records those activities which affect the long term liability and shareholder equity balance. The issue of shares is an inflow of cash whereas redemption and dividend is an outflow of cash.

The missing information is below the question in ask for details

Cash flow from Financing activities  

Issue of common stock $144,000             ($159,000 - $15,000)

Issue of treasury stock $17,000                ($110,000 - $93,000)

Net Cash flow from Financing activities        $161,000