Question

A company took out $665,000 of new debt this year and repaid $1,000,000 of older debt in the same year. The company also issued stock for $442,000 cash and paid dividends of $99,000 for the year. The company's financing cash flows appearing the statement of cash flows will show:

A. Net cash provided by financing activities of $8,000
B. Net cash provided by financing activities of $107,000
C. Net cash used in financing activities of $335,000
D. Net cash used in financing activities of $434,000

Answer 1

The company's financing cash flows appearing the statement of cash flows will show net cash provided by financing activities of $107,000 (Option B).

Step-by-step explanation:

The company's financing cash flows appearing the statement of cash flows will show net cash provided by financing activities of $107,000 (Option B). Net cash provided by financing activities is calculated by adding the cash received from new debt issued and stock issued, and subtracting the cash used for repaying older debt and paying dividends. In this case, the cash received from new debt ($665,000) and stock issued ($442,000) totals $1,107,000. The cash used for repaying older debt ($1,000,000) and paying dividends ($99,000) totals $1,099,000. Therefore, the net cash provided by financing activities is $1,107,000 - $1,099,000 = $8,000.