Question

Packard Company engaged in the following transactions during Year 1, its first year of operations. (assume all transactions are cash transactions)

Acquired $1,100 cash from the issue of common stock
Borrowed $570 from a bank
Earned $750 for revenues cash
Paid expenses of $280
Paid a $80 dividend
During Year 2, Packard engaged in the following transactions. (assume all transactions are cash transactions)
Issued an additional $475 of common stock
Repaid $325 of its debt to the bank
Earned revenues of $900 cash
Incurred expenses of $420
Paid dividends of $130
Packard Company's net cash flow from financing activities for Year 2 is:

A. $45
B. $200
C. $40

Answer 1

The net cash flow from financing activities for Packard Company in Year 2 is calculated by adding the inflow from issuing stock and subtracting outflows from debt repayment and dividend payments, totaling $20. This value is not listed in the given choices, indicating a discrepancy.

Step-by-step explanation:

The net cash flow from financing activities for Packard Company in Year 2 can be calculated by considering the cash transactions related to financing which include the issue of common stock, repayment of debt, and payment of dividends. We can determine this by adding the cash inflow from the issue of stock and then subtracting the cash outflows associated with repaying debt and paying dividends.

• Issuance of common stock: +$475
• Repayment of bank debt: -$325
• Payment of dividends: -$130

To calculate the net cash flow from financing activities, we sum these figures: $475 (inflow) - $325 (outflow) - $130 (outflow) = $20 (inflow).

Therefore, the correct answer is none of the options given (A. $45, B. $200, C. $40). There seems to be a discrepancy as the calculated net cash flow from financing activities is $20, not one of the provided choices.