Question

New Mexico, Inc., sold common stock for $560,000 and preferred stock for $56,000 during the current year. In addition, the company purchased treasury stock for $47,000 and paid dividends on common and preferred stock for $24,000. Determine the amount of cash provided by or used for financing activities during the year.

Answer 1

Answer:

The amount of cash provided by financing activities during the year is $545,000

Explanation:

Cash flow from financing activities is the cash inflows and outflows related to the fund of the business.

Cash Flow from financing activities

Inflows

Sold common stock                                                 $560,000

Sold preferred stock                                                $56,000  

Total Cash inflows                                                                     $616,000

Outflows

Company purchased treasury stock                      $47,000

Paid dividends on common and preferred stock $24,000

Total Cash inflows                                                                     ($71,000)

Net Cash flows                                                                         $545,000