Windwhirl Company,reported net income of $150,000 and a $5,000 gain on the sale of equipment.The cash received from the sale of equipment was $22,000.Windwhirl issued additional shares of stock for $225,000,paid off a $200,000 bond issue recorded at par and paid out $40,000 in dividends during the year.Calculate the increase or decrease in cash from financing activities.
A) ($15,000).
B) $7,000.
C) $27,000.
D) $152,000.

Question

Quizplus · Accepted Answer

The increase or decrease in cash from financing activities is calculated as the sum of the cash received from the issuance of additional shares of stock, the cash paid to pay off the bond issue, and the cash paid out in dividends. In this case, the cash received from the issuance of additional shares of stock is $225,000, the cash paid to pay off the bond issue is $200,000, and the cash paid out in dividends is $40,000. Therefore, the increase or decrease in cash from financing activities is $225,000 - $200,000 - $40,000 = $15,000.

Windwhirl Company,reported Net Income of $150,000 and a $5,000 Gain