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23 September, 19:50

During 2018, Stout Inc. had the following activities related to its financial operations:

Carrying value of convertible preferred stock in Stout,

converted into common shares of Stout $ 540,000

Payment in 2018 of cash dividend declared in 2017 to

preferred shareholders 279,000

Payment for the early retirement of long-term bonds payable

(carrying amount $3,930,000) 3,975,000

Proceeds from the sale of treasury stock (on books at cost of $387,000) 450,000

The amount of net cash used in financing activities to appear in Stout's statement of cash flows for 2018 should be

A) $2,985,000.

B) $3,264,000.

C) $3,804,000.

D) $3,822,000.

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Answers (1)
  1. 23 September, 20:03
    0
    C) $3,804,000

    Explanation:

    Given that

    Payment in 2018 of cash dividend declared in 2017 to preferred shareholders = $279,000

    Payment for the early retirement of long-term bonds payable = $3,975,000

    Proceeds from the sale of treasury stock = $450,000

    The computation of net cash is given below:-

    = Dividend declared to preferred stock + long-term bonds payable - sale of treasury stock

    = $279,000 + $3,975,000 - $450,000

    = $3,804,000
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