Question

In preparing Titan Inc.'s statement of cash flows for the year ended December 31, 2018, the following amounts were available:

Collect note receivable-----$615,000
Issue bonds payable---------639,000
Purchase treasury stock------300,000
What amount should be reported on Titan, Inc's statement of cash flows for financing activities?
a. $ 24,000
b. $1,254,000
c. $339,000
d. $315,000

Answer 1

c. $339,000

Step-by-step explanation:

The collection of notes receivable is usually classified as a cash inflow from operating activities. Both issuance of bonds payable and purchase of treasury stock are reported on the statement of cash flows as financing activities.

Cash Flows from financing activities

Issue bonds payable 639,000

Purchase treasury stock (300,000)

Cash flows from financing activities 339,000

Answer 2

The amount to be reported for financing activities on Titan, Inc's statement of cash flows for the period is $339,000, which is the net result of issuing bonds payable ($639,000) and purchasing treasury stock ($300,000). The correct option is c.

Step-by-step explanation:

The amount to be reported on Titan, Inc's statement of cash flows for financing activities for the year ended December 31, 2018, can be calculated by considering the activities that impact the company's financing which are the collection of notes receivable, the issuance of bonds payable, and the purchase of treasury stock.

Collecting a note receivable is an investing activity and not a financing activity, so it is not considered here. Issuing bonds payable increases financing cash inflow by $639,000, and purchasing treasury stock represents a cash outflow for financing activities of $300,000.

Therefore, the net financing activities would be the issuance of bonds payable less the purchase of treasury stock, which equals $339,000 ($639,000 bond issuance - $300,000 treasury stock purchase).

Hence, Option c is correct.