Question

Selected information from Dinkel Company's 2018 accounting records is as follows:

Proceeds from issuance of common stock --------------------$ 800,000
Proceeds from issuance of bonds ------------------------------2,400,000
Cash dividends on common stock paid --------------------------290,000
Cash dividends on preferred stock paid --------------------------120,000
Purchases of treasury stock ---------------------------------------240,000
Sale of stock to officers and employees not included above ---200,000
Dinkel's statement of cash flows for the year ended December 31, 2018, would show net cash provided (used) by financing activities of
a. $120,000.
b. $(470,000).
c. $290,000.
d. $2,750,000.

Answer 1

The net cash provided (used) by financing activities for Dinkel Company in 2018 is $2,590,000.

Step-by-step explanation:

The net cash provided (used) by financing activities can be calculated by summing up the relevant cash flows related to financing activities.

In this case, the relevant cash flows are the 'Proceeds from issuance of common stock' ($800,000), 'Proceeds from issuance of bonds' ($2,400,000), 'Cash dividends on common stock paid' ($290,000), 'Cash dividends on preferred stock paid' ($120,000), and 'Sale of stock to officers and employees not included above' (-$200,000). Adding these values, we get:

$800,000 + $2,400,000 - $290,000 - $120,000 - $200,000 = $2,590,000

Hence, the statement of cash flows for Dinkel Company for the year ended December 31, 2018, would show net cash provided (used) by financing activities of $2,590,000.