Balance sheet accounts for Hollis, Inc. contained the following amounts at the ends of years 1 and 2: The company's income statement for year 2 follows: There were no sales or retirements of plant and equipment in Year 2. Cash dividends of $5,000 were paid during Year 2. The company pays no income taxes. The company uses the direct method to determine the net cash provided by operating activities on the statement of cash flows.
-Net cash provided by financing activities for Year 2 would be:
A) $6,000
B) $10,000
C) $5,000
D) $11,000

Question

Balance sheet accounts for Hollis, Inc. contained the following amounts at the ends of years 1 and 2:  The company's income statement for year 2 follows:  There were no sales or retirements of plant and equipment in Year 2. Cash dividends of $5,000 were paid during Year 2. The company pays no income taxes. The company uses the direct method to determine the net cash provided by operating activities on the statement of cash flows.
-Net cash provided by financing activities for Year 2 would be:
A) $6,000 
B) $10,000 
C) $5,000 
D) $11,000

Quizplus · Accepted Answer

Since there were no sales or retirements of plant and equipment during Year 2, the only financing activity was the payment of cash dividends of $5,000. Therefore, the net cash provided by financing activities for Year 2 would be $5,000.

Balance Sheet Accounts for Hollis, Inc