Creative Sound Systems sold investments, land, and its own common stock for $39 million, $15.9 million, and $41.8 million, respectively. Creative Sound Systems also purchased treasury stock, equipment, and a patent for $21.9 million, $25.9 million, and $12.9 million, respectively. What amount should Creative Sound Systems report as net cash flows from financing activities?

Question

Business

Weston Mayo

9 February, 21:17

Creative Sound Systems sold investments, land, and its own common stock for $39 million, $15.9 million, and $41.8 million, respectively. Creative Sound Systems also purchased treasury stock, equipment, and a patent for $21.9 million, $25.9 million, and $12.9 million, respectively. What amount should Creative Sound Systems report as net cash flows from financing activities?

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Answers (2)

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Esperanza Kemp · Answer 1

The net cash flows from financing activities is $19.9 million

Explanation:

The net cash flows from financing activities comprises of cash inflows from the issue of common stocks of $41.8 million and the cash outflow expended on purchase of treasury stock of $21.9 million, hence the net cash flows from financing activities is $19.9 million ($41,8 million minus $21.9 million)

Cash inflows and outflows from the sale of land, equipment, investments as well as that of patents relate to investing activities of Creative Sound Systems, hence are not included in the calculation of net cash flows from financing activities

Carlie Neal · Answer 2

Creative Sound Systems should report $15,9 million as net cash flows from financing activities.

Explanation:

Consider only items relating to financing activities.

Cash flow from financing activities

Proceeds from Sale of common stock $41.8 million

Purchased of treasury stock ($25.9 million)

Net Cash flow from Financing Activities $15,9 million