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A company had the following cash flows for the year:

(a) Purchased land, $60,000
(b) Borrowed from a local bank, $100,000
(c) Paid employee salaries, $50,000
(d) Issued common stock, $75,000
(e) Paid dividends, $20,000
(f) Sold equipment, $40,000
(g) Sold services to customers, $120,000

What amount would be reported for net financing cash flows on the Statement of Cash Flows?

1) $155,000.
2) ($20,000).
3) $40,000.
4) $70,000.

Respuesta :

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Answer:

The amount would be reported for net financing cash flows on the Statement of Cash Flows: 1) $155,000

Explanation:

Net financing cash flows is calculated by using following formula:

Net financing cash flows = Cash in flows from issuing equity or debt  - Cash paid as dividends  - Repurchase of debt and equity

In the company, Net financing cash flows = Cash Borrowed from a local bank + Cash from Issued common stock - Paid dividends = $100,000 + $75,000 - $20,000 = $155,000

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