Net income was $469,000. Issued common stock for $80,000 cash. Paid cash dividend of $17,000. Paid $130,000 cash to settle a note payable at its $130,000 maturity value. Paid $116,000 cash to acquire its treasury stock. Purchased equipment for $92,000 cash. Use the above information to determine this company's cash flows from financing activities. (Amounts to be deducted should be indicated with a minus sign.)

Question

Nero

Business

21 December, 23:46

Net income was $469,000. Issued common stock for $80,000 cash. Paid cash dividend of $17,000. Paid $130,000 cash to settle a note payable at its $130,000 maturity value. Paid $116,000 cash to acquire its treasury stock. Purchased equipment for $92,000 cash. Use the above information to determine this company's cash flows from financing activities. (Amounts to be deducted should be indicated with a minus sign.)

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Bo Porter · Answer 1

-$183,000

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.

An increase in assets other than cash is an outflow while an increase in liabilities is an inflow. Depreciation and other non-cash expenses deducted in the income statements are added back while the non-cash income such gain on asset are deducted from net income.

The company's cash flows from financing activities

= $80,000 - $17,000 - $130,000 - $116,000

= - $183,000