Question

Below are several transactions for Louisville Company:

Proceeds from issuance of bonds payable
$635,000
Payment to purchase equipment
275,000
Payment of wages
115,000
Payment of dividends
155,000
Payment to pay off notes payable
195,000
Based on these transactions, what is the net cash flow from financing activities?

a.
$285,000 net cash provided by financing activities

b.
$275,000 net cash used for financing activities

c.
$0, because cash inflows equal cash outflows from financing activities

d.
$440,000 net cash provided by financing activities

Answer 1

The net cash flow from financing activities for Louisville Company is $285,000, which represents the cash inflow from issuing bonds minus the cash outflows from paying dividends and notes payable.

Step-by-step explanation:

Based on the provided transactions for Louisville Company, we need to calculate the net cash flow from financing activities. To do so, we should consider the proceeds from issuance of bonds payable, which contribute to cash inflow, and the payments of dividends and to pay off notes payable, which are cash outflows. The net cash flow from financing activities is therefore calculated as follows: Proceeds from issuance of bonds ($635,000) minus the payment of dividends ($155,000) and minus the payment to pay off notes payable ($195,000), resulting in a net cash flow of $285,000.

The correct answer is:

a. $285,000 net cash provided by financing activities