Statement of cash flows?
Question:
2001 2000
Building...$95,000 $0
Equipment...60,000 0
Bonds payab..20,000 10,000
Common Stock---at par..200,000 150,000
Paid-in Capital in...70,000 30,000
excess of par
Retained Earnings.210,000 160,000
Net income of the year 2001 was $75,000 and cash dividends of $25,000 were declared and paid.Assume that all transactions affecting the accounts listed above involved cash.
On the Statement of Cash Flows for the year ended 2001,the net cash flow used for investing is_____________ and the net cash flow provided by financing activities is _______________.
a)$35,000;$55,000
b)$35,000;$75,000
c)$155,000;$55,000
d)$155,000;$75,000
Answer:
answer is "c". Here's why:
Investing activities include capital outlays (purchase of equipment and purchase of building.) The balances for both of these accounts were $0 in 2000. Thus, the balance at 2001 was all paid out (or used) in 2001. Thus, total of 60 and 95 is $155K.
Financing activities are issuance of bonds, and issuance of stock. The changes in each of these accounts (50+40+10) less the dividends paid (25K)--$55K.
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