Question

Indicate which of the following has an effect on financing cash flows. (Amounts that decrease cash should be indicated with a minus sign.)

a. Notes payable with a carrying value of $15,000 are retired for $16,000 cash, resulting in a $1,000 loss.
b. Paid cash dividends of $11,000 to common stockholders.
c. Acquired $20,000 worth of machinery in exchange for common stock.
Items Amount Effect on financing cash flows
a. Notes payable (1,000) Decrease
b. Dividends (11,000) Decrease
c. Machinery $ 20,000 No effect

Answer 1

Effect on financing cash flows.

a. $16,000 Decrease

b. $11,000 Decrease

c. No Effect

Step-by-step explanation:

Only consider cash transactions on the financing activities. Financing Activities involve the acquisition and repayment of capital and debt finance.