During the current year, Maddox Industries sold a delivery truck with a book value of $5,000 for $15,000, declared and paid cash dividends of $6,000 and borrowed $40,000 from First National Bank.Maddox's net cash flows provided by financing activities is

Question

Quizplus · Accepted Answer

Net cash flows provided by financing activities include proceeds from borrowings, repayments of debt, and dividends paid. The sale of the delivery truck would be classified as a cash inflow from investing activities, not financing activities. Thus, the only cash outflow from financing activities is the payment of dividends ($6,000) and the only cash inflow is the proceeds from borrowing ($40,000). 
Therefore, the net cash flows provided by financing activities would be $40,000 - $6,000 = $34,000 (Option C).

During the Current Year, Maddox Industries Sold a Delivery Truck