Question

Use the following information to determine a company's cash flows from financing activities.a. Net income was $35,000. b. Issued common stock for $64,000 cash. c. Paid cash dividend of $14,600. d. Paid $50,000 cash to settle a note payable at its $50,000 maturity value. e. Paid $12,000 cash to acquire its treasury stock. f. Purchased equipment for $39,000 cash.

Answer 1

Answer:

Company's Cashflow from Financing Activities:

Issue of common stock                 64,000

Cash payment on dividend          (14,600)

Repayment of loan note               (50,000)

Cashflow from financing activities  600

Explanation:

Cashflow from financing activities is comprised of issue of stock less cash payment on dividend less repayment of loan note.

Answer 2

Answer:

($12,600) A net outflow

Explanation:

The financing activities are Issued common stock, Paid cash dividend, cash to settle a note payable, and paid cash to acquire its treasury stock.

Issued common stock = $64,000 (inflow)

Paid cash dividend = $14,600 (outflow)

Cash to settle a note payable = $50,000 (outflow)

Paid cash to acquire its treasury stock = $12,000 (outflow)

Net cash flows from financing activities = $64,000 - $14,600 - $50,000 - $12,000

= -$12,600

This is a net outflow of cash.