Question

Smith Law Firm specializes in the preparation of wills for estate planning. On October 1, 2021, the company begins operations by issuing stock for $12,000 and obtaining a loan from a local bank for $24,000. By the end of 2021, the company provides will preparation services of $31,000 cash and pays employee salaries of $22,000. In addition, Smith pays $1,900 in cash dividends to stockholders on December 31, 2021. Determine the amount of financing cash flows Smith would report in 2021.

Answer 1

Answer:

Cash flow from financing                              $34,100

Explanation:

The amount of financing cash flows that Smith would report in year 2021 is as follows:

Issuance of stock by Smith law firm            $12,000

Loan from local bank                                    $24,000

Dividends paid to stockholders                    ($1,900)

Cash flow from financing                              $34,100