Question

Crane Corporation had the following activities in 2017.

1. Payment of accounts payable $763,000
2. Issuance of common stock $256,000
3. Payment of dividends $326,000
4. Collection of note receivable $98,000
5. Issuance of bonds payable $516,000
6. Purchase of treasury stock $44,000

Compute the amount Crane should report as net cash provided (used) by financing activities in its 2017 statement of cash flows. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

To compute the net cash provided or used by financing activities, we look at the issuance or payment of liabilities and equity. In this case, the net cash provided by financing activities is $402,000.

Step-by-step explanation:

To compute the net cash provided or used by financing activities, we need to look at the activities related to financing, which are the issuance or payment of liabilities and equity.

In this case, we have the issuance of common stock ($256,000), issuance of bonds payable ($516,000), and the purchase of treasury stock (-$44,000). These activities increase cash flow. On the other hand, we have the payment of dividends (-$326,000). This activity decreases cash flow.

Therefore, to compute the net cash provided by financing activities, we add the cash inflows and subtract the cash outflows. In this case, the net cash provided by financing activities would be:

Net cash provided by financing activities = ($256,000 + $516,000 - $44,000) - $326,000 = $402,000