Lexington Company engaged in the following transactions during Year 1, its first year in operation: (Assume all transactions are cash transactions.) Acquired $5,000 cash from issuing common stock.Borrowed $3,200 from a bank.Earned $4,100 of revenues.Incurred $2,600 in expenses.Paid dividends of $600.
Lexington Company engaged in the following transactions during Year 2: (Assume all transactions are cash transactions.)
Acquired an additional $1,500 cash from the issue of common stock.Repaid $2,000 of its debt to the bank.Earned revenues, $5,500.Incurred expenses of $3,150.Paid dividends of $1,840.
What was the net cash flow from financing activities reported on Lexington's statement of cash flows for Year 2?
A)$2,340 outflow
B)$2,340 inflow
C)$1,500 inflow
D)$1,500 outflow

Question

Quizplus · Accepted Answer

In Year 2, the cash flow from financing activities includes acquiring $1,500 from issuing stock (inflow) and repaying $2,000 of debt and paying $1,840 in dividends (outflows). The net cash flow is $1,500 - $2,000 - $1,840 = -$2,340, which is an outflow.

Lexington Company Engaged in the Following Transactions During Year 1