Roberts Company sold equipment for $250,000,purchased a building for $6,500,000,sold short-term investments for $280,000,repaid principal on a note payable for $2,300,000 plus $230,000 of interest,and paid cash dividends of $20,000.
- What was the net cash flow from financing activities?

Question

Quizplus · Accepted Answer

The net cash flow from financing activities can be calculated as follows:

Sale of equipment: $250,000 (inflow)

Purchase of building: $6,500,000 (outflow)

Sale of short-term investments: $280,000 (inflow)

Repayment of note payable: $2,530,000 ($2,300,000 principal + $230,000 interest) (outflow)

Payment of cash dividends: $20,000 (outflow)

Net cash flow from financing activities = -$6,500,000 + $250,000 + $280,000 - $2,530,000 - $20,000 = -$2,320,000 (outflow)

Therefore, the best choice is B, which represents a net cash outflow of $2,320,000 from financing activities.

Roberts Company Sold Equipment for $250,000,purchased a Building for $6,500,000,sold