Question

"During 2018, Victory Solutions had the following cash flows:
(1) received cash of $5,000 billed to a customer in 2017;
(2) earned $20,000 of net income;
(3) paid interest of $6,000 on a corporate bond issued;
(4) paid dividends of $8,000 to its stockholders;
(5) borrowed $40,000 from a local bank; and
(6) purchased its own shares of common stock for $10,000.
What is Victory Solution's net cash flows from financing activities for 2018?"
a. $40,000.
b. $30,000.
c. $22,000.
d. $16,000.

Answer 1

Answer:

Option (C) is correct.

Explanation:

Given that,

Borrowing from bank = $40,000

Cash dividends paid = $8,000

Treasury stock purchases = $10,000

Net income = $20,000

Interest paid on corporate bond = $6,000

Net cash flows from financing activities:

= Bank borrowing - Cash dividends paid - Treasury stock purchases

= $40,000 - $8,000 - $10,000

= $22,000