Question

Selected information from Jacklyn Hyde Corporation's accounting records and financial statements for 2021 is as follows ($ in millions): Cash paid to retire notes $ 124 Common shares acquired for treasury 184 Proceeds from issuance of preferred stock 278 Proceeds from issuance of subordinated bonds 304 Cash dividends paid on preferred stock 92 Cash interest paid to bondholders 122 In its statement of cash flows, Jacklyn Hyde should report net cash inflows from financing activities of:

Answer 1

$642

Step-by-step explanation:

The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.

The net profit/loss, depreciation, changes in current assets (other than cash) and liabilities are considered as operating activities including income taxes.

The sale of assets, interest received, purchase of investments are examples of investing activities while the issuance of stocks, debt principal deduction (loan settlement), issuance of debt securities etc are examples of financing activities.

net cash inflows from financing activities

= - $124 + $184 + $278 + $304

= $642

The interest paid is a part of the operating activities.

Answer 2

net cash flow from financing activities is -$34 million

Step-by-step explanation:

Cash flow from financing activities (in millions):

proceeds from issuance of preferred stocks $184

proceeds from issuance of bonds $304

notes retired ($124)

interest paid to bondholders ($122)

dividends paid ($92)

treasury stocks ($184)

Net cash flow from financing activities ($34)

The cash flow from financing activities shows all the activities related to how the company is funded, including funding from shareholders or through debt.