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7 July, 02:14

Cash Flows from Financing Activities Murray Company earned net income of $450,000 in 20X2. Murray provided the following information: Murray Company Comparative Balance Sheets At December 31, 20X1 and 20X2 20X1 20X2 Bonds payable $ - 235,000 Mortgage payable 50,000 - Common stock 187,500 187,500 Paid-in capital in excess of par 140,000 140,000 Retained earnings 912,500 1,162,500 Required: Compute the financing cash flows for the current year. Use a minus sign to indicate a cash outflow."

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  1. 7 July, 06:06
    0
    -$15,000

    Explanation:

    The computation of financing cash flows for the current year is shown below:-

    For computing the financing cash flows first we need to find out the dividend paid

    Dividend paid = Retained earnings 2021 + Net income - Retained earning 2022

    = $912,500 + $450,000 - $1,162,500

    = $200,000

    Financing cash flow = Issue bonds payable - Repayment of Mortgage payable - Dividend paid

    = $235,000 - $50,000 - $200,000

    = - $15,000

    Therefore, for computing the financing cash flow for the current year we simply applied the above formula.
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