X company had net income of $3,000,000. Depreciation was $500,000, purchases of plant assets were $250,000,...

X company had net income of $3,000,000. Depreciation was $500,000, purchases of plant assets were $250,000, and disposals of plant assets for $100,000 resulted in a $50,000 gain. Stock was issued in exchange for an outstanding note payable of $125,000. Accounts receivable decreased by $25,000. Accounts payable decreased by $40,000. Dividends of $30,000 were paid to shareholders. x company had interest expense of $5,000. Based on this information, how much was x company's cash from financing activities?

Expert Solution

Only the following transactions from the above given data will affect the Financing activities section of statement of cash flows. All other transactions relate either to Operating Activities or Investing activities section of statement of cash flows

Stock was issued in exchange for an outstanding note payable of $125,000

Dividends of $30,000 were paid to shareholders

Stock was issued in exchange for an outstanding note payable of $125,000 will result in an increase in cash from Financing activities in the form of stock issued by $125,000 and on the other hand will result in a decrease in cash from Financing activities in the form of reduction in note payable by $125,000

Dividend paid of $30,000 will be shown as an outflow under the Financing Activities section of statement of cash flows

So, Net cash flows from Financing Activities

= $125,000 - $125,000 - $30,000

= - $30,000 that is, an outflow of $30,000 from Financing Activities

ekkarill92 answered 1 year ago

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