Dogs 4 U Corporation has net cash flow from financing activities for the last year of $10 million. The company paid $8 million in dividends last year. During the year, the change in notes payable on the balance sheet was $9 million, and change in common and preferred stock was $0 million. The end of year balance for long-term debt was $44 million. Calculate the beginning of year balance for long-term debt.

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Business

Dandy

25 June, 03:23

Dogs 4 U Corporation has net cash flow from financing activities for the last year of $10 million. The company paid $8 million in dividends last year. During the year, the change in notes payable on the balance sheet was $9 million, and change in common and preferred stock was $0 million. The end of year balance for long-term debt was $44 million. Calculate the beginning of year balance for long-term debt.

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Darian Arnold · Answer 1

Beginning of year balance for long-term debt = $35m.

Explanation:

First calculate value of increase in long term debt through cash flows from financing activities

Additions:

Increase in notes payable = $9 m

Increase in long-term debt (balancing figure) = $9m (10+8-9)

Increase in common and preferred stock = $0m

Deductions:

Dividends = $8m

Net cash flow from financing activities = $10m

Therefore, beginning of year balance for long-term debt = $44 - $9m = $35m.