Question

In: Accounting

THE Company reported the following selected account balances for 2021: Jan. 1, 2021 Dec. 31, 2021...

THE Company reported the following selected account
balances for 2021:

                      Jan. 1, 2021     Dec. 31, 2021
Accounts payable         47,000           28,000
Common stock            100,000          187,000 
Inventory                52,000           86,000
Investments              68,000           84,000
Mortgage payable         99,000           82,000
Retained earnings        23,000           51,000

THE Company's 2021 income statement appears below:

Sales revenue                   $500,000
Cost of goods sold               360,000
Other expenses                    85,000
Net income                      $ 55,000

Calculate THE Company's net cash flows from financing
activities for 2021.

Solutions

Expert Solution

Net cash flow from financing activities = $43,000

Working

Cash flows from Financing activities
Issue of shares $         87,000.00
Cash received from Share capital $       (17,000.00)
Cash paid for Dividends $       (27,000.00)
Net Cash flow from Financing activities $              43,000.00

.

Calculation of dividend paid   
Beginning balance of retained earnings   $       23,000.00
Add: Net income   $       55,000.00
$       78,000.00
Less: Ending balance of Retained earnings   $       51,000.00
Dividends paid in cash   $       27,000.00

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