Question

Company x paid company y $2.05 million for a new plant. during the same accounting period, company x experienced the following changes in its balance sheet: cash decreased by $354,000, accounts receivable increased by $322,000, inventory increased by $276,500, property, plant, and equipment increased by $753,600, and bonds payable increased by $2 million. the net cash flow provided by financing activities is:

O an inflow of $753,600.
O an outflow of $354,000.
O an inflow of $2.05 million.
O an inflow of $2 million.

Answer 1

The net cash flow provided by financing activities is an inflow of $2 million.

Step-by-step explanation:

The net cash flow provided by financing activities can be calculated by considering the changes in company X's balance sheet.

1. Cash decreased by $354,000, which is an outflow of cash.
2. Accounts receivable increased by $322,000, which does not affect cash flow.
3. Inventory increased by $276,500, which does not affect cash flow.
4. Property, plant, and equipment increased by $753,600, which is an outflow of cash.
5. Bonds payable increased by $2 million, which is an inflow of cash.

To calculate the net cash flow provided by financing activities, we need to add up the inflows and subtract the outflows:

• Inflows: $2 million
• Outflows: $354,000 + $753,600 = $1,107,600

The net cash flow provided by financing activities is therefore an inflow of $2 million.