Question

Red Co.'s beginning Common Stock balance was $110,000 and their ending Common Stock balance was $125,000. This will be reported as _____ in the statement of cash flows.

Answer 1

This will be reported as an increase of $15,000 in the financing activities section in the statement of cash flows.

Step-by-step explanation:

This can be determined as follows:

Beginning Common Stock balance = $110,000

Ending Common Stock balance = $125,000

Therefore, we have:

Cash received from issuing stock = Ending Common Stock balance - Beginning Common Stock balance = $125,000 - $110,000 = $15,000

Since cash received from issuing stock is an item under the the financing activities section in the statement of cash flows, this will therefore be reported as an increase of $15,000 in the financing activities section in the statement of cash flows.

Answer 2

an increase of $15,000 in the financing activities section

Step-by-step explanation:

In determining the financial position of a business there are 3 financial statements that are used: balance sheet, cash flow statement, and income statement.

The cash flow statement shows how cash inflows and outflows happen in a business. These are attributed to various activities like operations, financing, and investing activities.

Financing activities show how cash flows when a business raises capital. The aim is to pay back creditors and owners by issuing stock, selling stock, collecting loans, and paying dividends.

In the given scenario Red Co.'s had common stock of $110,000 which increased to $125,000.

So there was a selling of shares that increased their stocks by $15,000.

This is a financing activity.