Question

Use the below information to determine cash flows from financing activities.

a. Net income was $474,000.
b. Issued common stock for $78,000 cash.
c. Paid cash dividend of $13,000.
d. Paid $105,000 cash to settle a note payable at its $105,000 maturity value.
e. Paid $118,000 cash to acquire its treasury stock.
f. Purchased equipment for $94,000 cash.

Answer 1

Answer:

-$158000

Explanation:

Net income belongs to cash flows from operating activities while the purchase of equipment would be shown as cash flow under investing activities.

Cash flow used by financing activities= Issued common stock-cash dividends-cash used in settling notes-cash paid for treasury stock

Cash flow used by financing activities=$78,000-$13000-$105000-$118,000

cash flow used by financing activities=-$158000 (negative sign indicates cash outflow rather than inflow)