If cash dividends of $135,000 were paid during the year and the company sold 1,000 shares of common stock at $30 per share, the statement of cash flows would report net cash flow from financing activities as $165,000.

Question

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The sale of common stock would result in an inflow of cash of $30,000 ($30/share x 1,000 shares) and would be reported as a financing activity, but the net cash flow from financing activities would only be $105,000 ($30,000 inflow from sale of common stock - $135,000 outflow from cash dividends).

If Cash Dividends of $135,000 Were Paid During the Year