The balance sheets of Butler, Inc. and its 70 percent-owned subsidiary, Cassie Corp., are presented below: Additional information for 2013:
Net cash flow from financing activities was:
A) $(129,000).
B) $(96,000).
C) $(300,000).
D) $(80,000).
E) $(126,000).

Question

The balance sheets of Butler, Inc. and its 70 percent-owned subsidiary, Cassie Corp., are presented below:  Additional information for 2013: 
Net cash flow from financing activities was:
A) $(129,000). 
B) $(96,000). 
C) $(300,000). 
D) $(80,000). 
E) $(126,000).

Quizplus · Accepted Answer

The net cash flow from financing activities can be calculated by adding the cash inflows and outflows from financing activities. From the balance sheets, we can see that Butler, Inc. issued $20,000 of common stock in 2013, and Cassie Corp. issued $60,000 of common stock. In addition, Butler, Inc. repaid $100,000 of long-term debt, and Cassie Corp. repaid $9,000 of long-term debt. Therefore, the total cash inflow from financing activities was $80,000 ($20,000 + $60,000). The total cash outflow from financing activities was $209,000 ($100,000 + $9,000 + $20,000 + $80,000, which represents dividends paid by both companies). Therefore, the net cash flow from financing activities was $(129,000) ($80,000 - $209,000).

The Balance Sheets of Butler, Inc