Below are the transactions for the Louisville Company: $$\begin{array} { l l }
\text { Proceeds from issuance of bonds payable } & \$ 635,000 \
\text { Payment to purchase equipment } & \$ 275,000 \
\text { Payment of wages } & \$ 115,000 \
\text { Payment of dividends } & \$ 155,000 \
\text { Payment to pay off notes payable } & \$ 195,000
\end{array}$$ Based on these transactions, what is the net cash flow from financing activities?
A) $285,000 net cash provided by financing activities.
B) $275,000 net cash used for financing activities.
C) $0, because cash inflows equal cash outflows from financing activities.
D) $440,000 net cash provided by financing activities.

Question

Below are the transactions for the Louisville Company: $$\begin{array} { l l } 
\text { Proceeds from issuance of bonds payable } & \$ 635,000 \
\text { Payment to purchase equipment } & \$ 275,000 \
\text { Payment of wages } & \$ 115,000 \
\text { Payment of dividends } & \$ 155,000 \
\text { Payment to pay off notes payable } & \$ 195,000
\end{array}$$ Based on these transactions, what is the net cash flow from financing activities?
A) $285,000 net cash provided by financing activities.
B) $275,000 net cash used for financing activities.
C) $0, because cash inflows equal cash outflows from financing activities.
D) $440,000 net cash provided by financing activities.

Quizplus · Accepted Answer

Net cash flow from financing activities is calculated by adding the proceeds from issuance of bonds payable ($635,000) and subtracting the payment of dividends ($155,000) and the payment to pay off notes payable ($195,000). This results in $285,000 net cash provided by financing activities. Payments to purchase equipment and payment of wages are not considered financing activities; they are investing and operating activities, respectively.

Below Are the Transactions for the Louisville Company Based on These Transactions, What Is the Net Cash Flow