Question

Dristell Inc. had the following activities during the year (all transactions are for cash unless stated otherwise): A building with a book value of $400,000 was sold for $500,000. Additional common stock was issued for $160,000. Dristell purchased its own common stock as treasury stock at a cost of $75,000. Land was acquired by issuing a 6%, 10-year, $750,000 note payable to the seller. A dividend of $40,000 was paid to shareholders. An investment in Fleet Corp.’s common stock was made for $120,000. New equipment was purchased for $65,000. A $90,000 note payable issued three years ago was paid in full. A loan for $100,000 was made to one of Dristell’s suppliers. The supplier plans to repay Dristell this amount plus 10% interest within 18 months. Required:
Calculate net cash flows from financing activities.

Answer 1

Answer:

Th net cash flows from financing activities is ($45,000)

Explanation:

The computation of the Cash Flows from Financing Activities shown below:

Cash flow from Financing Activities

Issue of additional common stock $160,000

Less -  purchase treasury stock ($75,000)

Less - dividend paid ($40,000)

Less - long term note payable paid ($90,000)

Net Cash flow from financing activities                         ($45,000)