Question

Pursley, Inc. owns 70 percent of Harry Corp. The consolidated income statement for a year reports $50,000 Noncontrolling Interest in Harry Corp.’s Net Income. Harry paid dividends in the amount of $80,000 for the year. What are the effects of these transactions in the consolidated statement of cash flows for the year?

Answer 1

Answer:

This $24,000 reflect under the financing activities

Explanation:

Basically there are three types of activities:

1. Operating activities: It includes those transactions which affect the working capital, and it records transactions of cash receipts and cash payments.

2. Investing activities: It records those activities which include purchase and sale of the fixed assets

3. Financing activities: It records those activities which affect the long term liability and shareholder equity balance.  

The dividend is paid $80,000 and owns 70 percent so the final amount would be = $80,000 × 70% = $56,000

So, the cash outflow would be = $80,000 - $56,000 = $24,000

This $24,000 reflect under the financing activities