The following events occurred during an accounting period: Machinery was purchased for $4,500 cash. $10,000 was borrowed on a long-term note. 1,000 shares of $5 par value common stock were issued for cash, at par. Cash dividends of $2,000 were declared and paid. An investment in another business was sold for $23,000. $50,000 in bonds was retired at maturity. A plant asset with a book value of $4,500 was sold for $4,500. What were the net cash flows from financing activities?

Question

Business

Erick Faulkner

28 May, 20:51

The following events occurred during an accounting period: Machinery was purchased for $4,500 cash. $10,000 was borrowed on a long-term note. 1,000 shares of $5 par value common stock were issued for cash, at par. Cash dividends of $2,000 were declared and paid. An investment in another business was sold for $23,000. $50,000 in bonds was retired at maturity. A plant asset with a book value of $4,500 was sold for $4,500. What were the net cash flows from financing activities?

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Yesenia Zhang · Answer 1

The cash flow from financing activities is $-37000

Explanation:

The financing activities involve the transaction relevant to shareholders and bondholders. The issuance, dividend, repurchase, and maturity events all fall in the category of financing activities.

The given problem indicates that company borrow $10000 long-term note and issue stock to shareholder for cash 1000 shares for $5 par value $5000. Cash dividend paid $-2000 and bond retired at maturity $-50000. So, Net cash flow from financing activities is negative 37000 it means the company used cash in financing activities during the year.