Question

Net income was $475,000. Issued common stock for $72,000 cash. Paid cash dividend of $14,000. Paid $105,000 cash to settle a note payable at its $105,000 maturity value. Paid $124,000 cash to acquire its treasury stock. Purchased equipment for $95,000 cash. Use the above information to determine this company's cash flows from financing activities. (Amounts to be deducted should be indicated with a minus

Answer 1

Net Cash flow from Financing activities -$142,000

Step-by-step explanation:

Financing activities: It records those activities which affect the long term liability and shareholder equity balance. The issue of shares is an inflow of cash whereas redemption and dividend is an outflow of cash.

Cash flow from Financing activities

Issued common stock for $72,000

Cash dividends paid -$14,000

Payment of Note payable -$105,000

Purchase of treasury stock -$95,000

Net Cash flow from Financing activities -$142,000

Purchased equipment is an investing activity and net income is come under the operating activity. So, we do not consider it