Question

Use the following information to determine this company's cash flows from financing activities.

a. Net income was $465,000.
b. Issued common stock for $73,000 cash.
c. Paid cash dividend of $18,000.
d. Paid $130,000 cash to settle a note payable at its $130,000 maturity value.
e. Paid $118,000 cash to acquire its treasury stock.
f. Purchased equipment for $93,000 cash.

Answer 1

Answer: Net cash used/ spent was $193,000

Explanation:

Cash from Financing activities involves cash transactions in relation to Equity (including dividends paid) and long term debt as these are the chief providers of cash to finance the business.

Cash from financing activities is:

= Issuance of common stock - Dividend - Settlement of Note payable - Treasury stock purchase

= 73,000 - 18,000 - 130,000 - 118,000

= -$193,000