Question

A company reports the following information for Year 1: Sale of equipment $20,000 Issuance of the company’s bonds 10,000 Dividends paid 5,000 Purchase of stock of another company 2,000 Purchase of U.S. Treasury note 2,000 Income taxes paid 2,000 Interest income received 500 What is the company’s net cash flow from financing activities?a. $9,000b. $5,000 c. $5,500 d. $15,000

Answer 1

Answer:

+$29,500

Explanation:

Following is an extract of cash flow from financing activities,

Proceeds from sale                         $20,000

Proceeds from bond issue              $10,000

Dividends paid                                  ($5,000)

Stock Purchase                                  ($2,000)

Treasury Purchase                             ($2,000)

Interest income                                   $500

Income Taxes paid                             ($2,000)

Net Effect of Cash flow                       +$29,500

Assuming income taxes are on the income earned from financing activities. Negative figures are in parenthesis.

Hope that helps.