Question

During 2018, Stout Inc. had the following activities related to its financial operations:

Carrying value of convertible preferred stock in Stout,
converted into common shares of Stout $ 540,000
Payment in 2018 of cash dividend declared in 2017 to
preferred shareholders 279,000
Payment for the early retirement of long-term bonds payable
(carrying amount $3,930,000) 3,975,000
Proceeds from the sale of treasury stock (on books at cost of $387,000) 450,000

The amount of net cash used in financing activities to appear in Stout's statement of cash flows for 2018 should be

A) $2,985,000.
B) $3,264,000.
C) $3,804,000.
D) $3,822,000.

Answer 1

C) $3,804,000

Step-by-step explanation:

Given that

Payment in 2018 of cash dividend declared in 2017 to preferred shareholders = $279,000

Payment for the early retirement of long-term bonds payable = $3,975,000

Proceeds from the sale of treasury stock = $450,000

The computation of net cash is given below:-

= Dividend declared to preferred stock + long-term bonds payable - sale of treasury stock

= $279,000 + $3,975,000 - $450,000

= $3,804,000