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Stansfield Corporation had the following activities in 2017.

1. Payment of accounts payable \(770,000.

4. Collection of note receivable \)100,000.

2. Issuance of common stock \(250,000.

5. Issuance of bonds payable \)510,000.

3. Payment of dividends \(350,000.

6. Purchase of treasury stock \)46,000.

Compute the amount Stansfield should report as net cash provided (used) by financing activities in its 2017 statement of cash flows.

Short Answer

Expert verified

Net cash under financing activities:$364,000

Step by step solution

01

Definition of Financing Activities

All activities that involve inflow and outflow of cash about the issue and redemption of the securities, either debt or equity, are included in the financing activities of the business entity.

02

Net cash provided (used) by financing activities

Particular

Amount $

Issuance of common stock

$250,000

Payment of dividends

($350,000)

Issuance of bonds payable

$510,000

Purchase of treasury stock

($46,000)

Cash provided by financing activities

$364,000

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Most popular questions from this chapter

In 2017, Wild Corporation reported a net loss of \(70,000. Wildโ€™s only net income adjustments were depreciation expense \)81,000, and increase in accounts receivable $8,100. Compute Wildโ€™s net cash provided (used) by operating activities.

Question:Data for the Vince Gill Company are presented in E23-3.

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Prepare the operating activities section of the statement of cash flows using the direct method.

The accounts below appear in the ledger of Anita Baker Company.

Retained Earnings Dr. Cr. Bal.

Jan. 1, 2017 Credit Balance \( 42,000

Aug. 15 Dividends (cash) \)15,000 27,000

Dec. 31 Net Income for 2017 \(40,000 67,000

Equipment Dr. Cr. Bal.

Jan. 1, 2017 Debit Balance \)140,000

Aug. 3 Purchase of Equipment \(62,000 202,000

Sept. 10 Cost of Equipment Constructed 48,000 250,000

Nov. 15 Equipment Sold \)56,000 194,000

Accumulated Depreciationโ€” Equipment Dr. Cr. Bal.

Jan. 1, 2017 Credit Balance \( 84,000

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Dec. 31 Depreciation for 2017 \(16,800 54,600

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From the postings in the accounts above, indicate how the information is reported on a statement of cash flows by preparing a partial statement of cash flows using the indirect method. The loss on sale of equipment (November 15) was \)5,800.

Question: You have completed the field work in connection with your audit of Alexander Corporation for the year ended December 31, 2017. The balance sheet accounts at the beginning and end of the year are shown below.

Dec 31, 2017

Dec 31, 2016

Increase or (decrease)

Cash

\(277,900

\)298,000

(\(20,100)

Accounts receivable

469,424

353,000

116,424

Inventory

741,700

610,000

131,700

Prepaid expenses

12,000

8,000

4,000

Investment in subsidiary

110,500

0

110,500

Cash surrender value of life insurance

2,304

1,800

504

Machinery

207,000

190,000

17,000

Buildings

535,200

407,900

127,300

Land

52,500

52,500

0

Patents

69,000

64,000

5,000

Copyrights

40,000

50,000

(10,000)

Bond discount and issue costs

4,502

0

4,502

Total

\)2,522,030

\(2,035,200

\)486,830

Income tax payable

\(90,250

\)79,600

\(10,650

Account payable

299,280

280,000

19,280

Dividend payable

70,000

0

70,000

Bond payable โ€“ 8%

125,000

0

125,000

Bond payable โ€“ 12%

0

100,000

(100,000)

Allowance for doubtful accounts

35,300

40,000

(4,700)

Accumulated depreciation โ€“ building

424,000

400,000

24,000

Accumulated depreciation โ€“ machinery

173,000

130,000

43,000

Premium on bond payable

0

2,400

(2,400)

Common stock โ€“ no par

1,176,200

1,453,200

(277,000)

Paid-in-capital in excess of par โ€“ common stock

109,000

0

109,000

Retained earnings โ€“ unappropriated

20,000

(450,000)

470,000

Total

\)2,522,030

\(2,035,200

\)486,830

STATEMENT OF RETAINED EARNINGS

FOR THE YEAR ENDED DECEMBER 31, 2017


January 1, 2017

Balance (deficit)

(\(450,000)

March 31, 2017

Net income for first quarter of 2017

25,000

April 1, 2017

Transfer from paid-in capital

425,000

Balance

0

December 31, 2017

Net income for last three quarters of 2017

90,000

Dividend declaredโ€”payable January 21, 2018

(70,000)

Balance

\)20,000

Your working papers from the audit contain the following information:

1. On April 1, 2017, the existing deficit was written off against paid-in capital created by reducing the stated value of the nopar stock.

2. On November 1, 2017, 29,600 shares of no-par stock were sold for \(257,000. The board of directors voted to regard \)5 per share as stated capital.

3. A patent was purchased for \(15,000.

4. During the year, machinery that had a cost basis of \)16,400 and on which there was accumulated depreciation of \(5,200 was sold for \)9,000. No other plant assets were sold during the year.

5. The 12%, 20-year bonds were dated and issued on January 2, 2005. Interest was payable on June 30 and December 31. They were sold originally at 106. These bonds were redeemed at 100.9 plus accrued interest on March 31, 2017.

6. The 8%, 40-year bonds were dated January 1, 2017, and were sold on March 31 at 97 plus accrued interest. Interest is payable semiannually on June 30 and December 31. Expense of issuance was \(839.

7. Alexander Corporation acquired 70% control in Crimson Company on January 2, 2017, for \)100,000. The income statement of Crimson Company for 2017 shows a net income of \(15,000.

8. Major repairs to buildings of \)7,200 were charged to Accumulated Depreciationโ€”Buildings. 9. Interest paid in 2017 was \(10,500 and income taxes paid were \)34,000.

Instructions

From the information given, prepare a statement of cash flows using the indirect method. A worksheet is not necessary, but the principal computations should be supported by schedules or general ledger accounts. The company uses straight-line amortization for bond interest.

Question: Your roommate is puzzled. During the last year, the company in which she is a stockholder reported a net loss of \(675,000, yet its cash increased \)321,000 during the same period of time. Explain to your roommate how this situation could occur.

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