Question

At the beginning of the year, Gonzales Corporation had $100,000 in cash. During the year, the company undertook a major expansion. From the statement of cash flows, operating activities generated $300,000 of cash, while investing activities required cash expenditures of $800,000. At the end of the year, the company's cash position was $50,000. What was the net cash provided by the company's financing activities?

a.$350,000
b.$400,000
c.$300,000
d.$450,000
e.$500,000

Answer 1

The correct answer is option (D).

Step-by-step explanation:

According to the scenario, the given data are as follows:

Beginning cash flow = $100,000

Operating activities generated = $300,000

Investing activities required = $800,000

End Cash = $50,000

So, we can calculate the net cash provided by company's financing activities by using following formula:

So, first we analyze Cash flow after operating activities, then

Cash flow (after operating activities ) = Beginning cash flow + Operating activities generated

= $100,000 + $300,000

= $400,000

Now, cash flow after investing = $400,000 - $800,000

= -$400,000

Given that closing cash balance = $50,000

So, Net cash provided = $400,000 + $50,000

= $450,000

Hence, the net cash provided by the company's financing activities was $450,000.