Hardey Corporation's balance sheet and income statement appear below: Cash dividends were $8. The company sold equipment for $13 that was originally purchased for $8 and that had accumulated depreciation of $8.
-The net cash provided by (used by) financing activities for the year was:
A) $16
B) $3
C) $11
D) ($8)

Question

Hardey Corporation's balance sheet and income statement appear below:   Cash dividends were $8. The company sold equipment for $13 that was originally purchased for $8 and that had accumulated depreciation of $8.
-The net cash provided by (used by) financing activities for the year was:
A) $16 
B) $3 
C) $11 
D) ($8)

Quizplus · Accepted Answer

The cash dividends of $8 would be deducted from the financing activities section of the cash flow statement, as it represents cash outflows to the shareholders. The sale of equipment for $13 would affect the investing activities section, as it represents a cash inflow from the sale of a long-term asset. The purchase of equipment for $8 would have been recorded previously in the investing activities section, so the gain from the sale of equipment ($5) would be added back to that section. Therefore, the net cash provided by (used by) financing activities for the year would be a cash outflow of $8 for dividends and a cash inflow of $5 in investing activities, resulting in a net cash outflow of $3 in financing activities.

Hardey Corporation's Balance Sheet and Income Statement Appear Below