Question

Brief Exercise 11-11 Calculate net cash flows from financing activities (LO11-5) Creative Sound Systems sold investments, land, and its own common stock for $40 million, $16 million, and $42 million, respectively. Creative Sound Systems also purchased treasury stock, equipment, and a patent for $22 million, $26 million, and $13 million, respectively. What amount should Creative Sound Systems report as net cash flows from financing activities?

Answer 1

Answer:

$20 million

Explanation:

Data provided

Issue of common stock = $42 million

Purchase of treasury stock = $22 million

The computation of net cash flows from financing activities is shown below:-

Net cash flow from financing activities = Issue of common stock - Purchase of treasury stock

= $42 million - $22 million

= $20 million

Therefore for computing the net cash flow from financing activities we simply deduct the purchase of common stock from issue of common stock.