Mars Chemicals Company uses the indirect method to prepare its statement of cash flows. Refer to the following portion of the comparative balance sheet: Mars Chemicals Company Comparative Balance Sheet December 31, 2017 and 2016 2016 2015 Increase / (Decrease) Common Stock $32,000 $2,400 $29,600 Retained Earnings 155,000 154,000 1,000 Treasury Stock ( 8,200) ( 5,000) (3,200) Total Equity $178,800 $151,400 $27,400 Net Income for the year was $57,000.

Which of the following statements is true of Taylor's statement of cash flows for 2016?

A. The company issued stocks for $32,000.

B. The net cash flow from financing activities is $178,800.

C. The company declared $56,000 as dividends.

D. The company purchased treasury stock for $8,200.

C. The company declared $56,000 as dividends.

Explanation:

C. The company declared $56,000 as dividends: is correct because the retained Earnings increased in 2016 is $1,000, while net income for the year was $57,000; it means that the company declared dividend for $56,000 ( = 57,000 - 1,000)

A. The company issued stocks for $32,000: is wrong because the increase in common Stock is $29,600 only.

B. The net cash flow from financing activities is $178,800: is wrong because financing activities are those related debt, equity and dividend; and from all above only dividend of $56,000 declared; common stock issued in year: $29,600; treasury Stock issued in year $3,200; then net cash flow from financing activities is negative $29,600 = (29,600 - 3,200-56,000)

D. The company purchased treasury stock for$8,200: is wrong because the increase in Treasury Stock is $3,200 only.