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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, Leppard Inc. issued 1,000 shares of \(10 par value common stock for land worth \)40,000.

(a) Prepare Leppardโ€™s journal entry to record the transaction.

(b) Indicate the effect the transaction has on cash.

(c) Indicate how the transaction is reported on the statement of cash flows.

For purposes of the statement of cash flows, under IFRS, income taxes paid are treated as:

  1. cash flows from operating activities unless they can be separately identified as part of investing or financing activities.
  2. an operating activity in all cases.
  3. an investing or operating activity, depending on whether a refund is received.
  4. either operating, financing, or investing activity, but treated consistently to other companies in the same industry.

What is the purpose of the statement of cash flows? What

information does it provide?

Data for Anita Baker Company are presented in E23-18.

Instructions

Prepare entries in journal form for all adjustments that should be made on a worksheet for a statement of cash flows.

Question:The comparative balance sheets for Hinckley Corporation show the following information.


December 31

2017

2016

Cash

\(33,500

\)13,000

Accounts receivable

12,250

10,000

Inventory

12,000

9,000

Available-for-sale debt investment

0

3,000

Building

0

29,750

Equipment

45,000

20,000

Patents

5,000

6,250

\(107,750

\)91,000

Allowance for doubtful accounts

\(3,000

\)4,500

Accumulated depreciation โ€“ equipment

2,000

4,500

Accumulated depreciation โ€“ building

0

6,000

Accounts payable

5,000

3,000

Dividend payable

0

5,000

Notes payable, short-term (non-trade)

3,000

4,000

Long-term note payable

31,000

25,000

Common stock

43,000

33,000

Retained earnings

20,750

6,000

\(107,750

\)91,000

Additional data related to 2017 are as follows.

1. Equipment that had cost \(11,000 and was 40% depreciated at time of disposal was sold for \)2,500.

2. \(10,000 of the long-term note payable was paid by issuing common stock.

3. Cash dividends paid were \)5,000.

4. On January 1, 2017, the building was completely destroyed by a flood. Insurance proceeds on the building were \(30,000 (net of \)2,000 taxes).

5. Investments (available-for-sale) were sold at \(1,700 above their cost. The company has made similar sales and investments in the past.

6. Cash was paid for the acquisition of equipment.

7. A long-term note for \)16,000 was issued for the acquisition of equipment.

8. Interest of \(2,000 and income taxes of \)6,500 were paid in cash.

Instructions

Prepare a statement of cash flows using the indirect method. Flood damage is unusual and infrequent in that part of the country

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