Question

Bad Brad's BBQ had cash flows for the year as follows ($ in millions):CASH RECEIVED FROM: Customers $1,800Interest on investments 200Sale of land 100Sale of common stock 600Issuance of debt securities 2,000CASH PAID FOR: Interest on debt $300Income tax 80Debt principal reduction 1,500Purchase of equipment 4,000Purchase of inventory 1,000Dividends on common stock 200Operating expenses 500Bad Brad's would report net cash inflows (outflows) from financing activities in the amount of:a) $1,100.b) $820.c) $900.

Answer 1

Answer:

Option (c) is correct.

Explanation:

Given that,

Sales of common stock = $600

Issuance of debt securities = $2,000

Debt principal reduction = $1,500

Dividend on common stock = $200

Cash from financing activities:

= Sales of common stock + Issuance of debt securities - Debt principal reduction - Dividend on common stock

= $600 + $2,000 - $1,500 - $200

= $900

Therefore, Brad's would report net cash inflows from financing activities in the amount of $900.