Question

Coronado Company purchased treasury stock with a cost of $15600 during 2019. During the year, the company paid dividends of $20900 and issued bonds payable for proceeds of $854000. Cash flows from financing activities for 2019 total

a. $848700 net cash inflow.
b. $833100 net cash inflow.
c. $854000 net cash outflow.
d. $817500 net cash inflow.

Answer 1

Cash flows from financing activities for 2019 result in a net cash inflow of $817,500.

Step-by-step explanation:

Cash flows from financing activities include transactions related to obtaining and repaying funds for the company's long-term financing needs. In this case, the company issued bonds payable for $854,000, which represents an inflow of cash as it received funds from investors. The company also purchased treasury stock for $15,600, which represents an outflow of cash as it used its own funds to buy back its own shares. Finally, the company paid dividends of $20,900, which represents an outflow of cash as it distributed a portion of its profits to shareholders.

To calculate the net cash flow from financing activities, we subtract the total cash outflows from the total cash inflows. So, $854,000 (cash inflow from issuing bonds) minus $15,600 (cash outflow from purchasing treasury stock) minus $20,900 (cash outflow from paying dividends) equals $817,500 net cash inflow from financing activities for 2019.

To calculate net cash inflow from financing activities for 2019:

1. Add proceeds from issuing bonds: $854,000
2. Subtract dividends paid: -$20,900
3. Subtract cost of treasury stock purchased: -$15,600

Applying these calculations we get:

$854,000 (bonds issued) - $20,900 (dividends paid) - $15,600 (treasury stock) = $817,500 net cash inflow.

So, the correct option is d. $817,500 net cash inflow.