Question

Santa Fe Company was started on January 1, Year 1, when it acquired $9,800 cash by issuing common stock. During Year 1, the company earned cash revenues of $6,200, paid cash expenses of $3,650, and paid a cash dividend of $1,200. Based on this information, which is true?

a) The 2016 statement of cash flows would show net cash inflow from operating activities of $2,450.

b) The 2016 income statement would show net income of $1,300.

c) The 2016 statement of cash flows would show a net cash flow from financing activities of $9,700.

d) The December 31, 2016 balance sheet would show total equity of $15,750.

Answer 1

The 2016 statement of cash flows would show net cash flow from financing activities if $8,600.

Step-by-step explanation:

The operating activities cash flows is determined by Revenue - Cash expenses.

Operating activities = $6200 - $3650 = 2550.

The dividend paid by the company is considered as Financing activity. The financing activity will include common stock minus dividend paid. Net cash flows from Financing activity = $9800 - $1200 = $8600.