Question

Use the indirect method to answer questions 11-14. The following information is available for Felix Company:

Net income $300
Decrease in plant and equip.
$40
Depreciation expense 20
Increase in deferred tax asset
5
Gain on sale of assets 35
Decrease in long-term debt 50
Increase in inventories 25
Decrease in accounts payable
15

What is cash from financing activities for Felix Company?
a. $50
b. $65
c. ($50)
d. $60

Answer 1

The cash from financing activities for Felix Company is a decrease of $50, indicating that the company has paid down some of its long-term debt.

Step-by-step explanation:

When assessing the cash from financing activities for Felix Company using the indirect method, we only consider transactions that involve equity and debt.

In this case, the only transaction affecting cash from financing activities is the decrease in long-term debt, which indicates that the company has made payments on its debt during the period. The decrease in long-term debt is $50, which means that the cash used in financing activities is $50. Therefore, the correct answer is c. ($50), which signifies an outflow of cash from financing activities.