Chapter 12: Cash Flows From Financing | Summary - Edubirdie

University:
Grand Rapids Community College
Course:
Financial and Managerial Accounting: Information for Decisions - John J. Wild
Academic year:

2024
Views:

390

Pages:

1
Author:

stud_ice13

To compute cash flows from financing activities, we analyze changes in noncurrent liabilities and equity accounts, such as long-term debt, notes payable, common stock, and retained earnings. Below is the analysis based on the transactions provided: Step-by-Step Analysis for Financing Cash Flows 1. Issued Common Stock for $40 Cash: • Cash Flow Impact: +$40 cash inflow from issuing common stock. 2. Paid $70 Cash to Retire Notes Payable at its Maturity Value: • Cash Flow Impact: -$70 cash outflow for retirement of notes payable. 3. Paid Cash Dividend of $15: • Cash Flow Impact: -$15 cash outflow for dividends. 4. Paid $5 Cash to Acquire Treasury Stock: • Cash Flow Impact: -$5 cash outflow for treasury stock acquisition. Summarizing Cash Flows from Financing Activities Total cash flow from financing activities is calculated as follows: 40+(−70)+(−15)+(−5)=−5040 + (-70) + (-15) + (-5) = 5040+(−70)+(−15)+(−5)=−50 Solution: The company’s cash flows from financing activities total -$50.

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