Ask Question
27 May, 05:07

Exercise 12-8 Cash flows from financing activities LO P3 Net income was $35,000. Issued common stock for $64,000 cash. Paid cash dividend of $14,600. Paid $50,000 cash to settle a note payable at its $50,000 maturity value. Paid $12,000 cash to acquire its treasury stock. Purchased equipment for $39,000 cash. Use the above information to determine this company's cash flows from financing activities. (Amounts to be deducted should be indicated with a minus sign.)

+4
Answers (1)
  1. 27 May, 06:10
    0
    Cash flows from financing activities = - $12600

    Explanation:

    Before we determine this company's cash flows from financing activities we should understand what components or cash flows are and/or can be associated with financing activities of a business. Cash flows from financing activities include all those cash flows that are received/paid in financing/funding the entity's operations. All those cash flows that are related to raising funds/finance for the business which normally include cash from issuance of equity/debt/, settlement of mature instruments etc.

    So in the question the cash flows that relate to financing activities are as follows;

    issued common stock = $64000

    paid cash dividend = $14600

    settlement of note payable = $50000

    payment to acquire treasury stock = $12000

    Cash flows from financing activities = $64000 - $14600 - $50000 - $12000

    Cash flows from financing activities = - $12600

    In this situation, the company is facing negative cash flows as company has received lower cash from financing and has paid/settled greater amounts.

    Note: purchasing of equipment is a cash outflow from investing activities and net income generated is a cash inflow from operating activities.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Exercise 12-8 Cash flows from financing activities LO P3 Net income was $35,000. Issued common stock for $64,000 cash. Paid cash dividend ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers