Baker Corporation conducted the following activities during 2001: (1)they sold 10,000 shares of their own stock for $20.00 per share; (2)they issued bonds for which they received $500,000; (3)they paid dividends to their stockholders totaling $85,000; (4)they sold a piece of equipment for $50,000 that they were carrying on their books for $20,000; (5)they earned net income of $140,000. What would be shown on the Statement of Cash Flows for "cash from financing activities" based on the information above?
A)$615,000
B)$650,000
C)$655,000
D)$700,000
E)$740,000

Question

Quizplus · Accepted Answer

Cash from financing activities includes cash transactions that affect the equity and debt of the company. In this case, selling 10,000 shares of stock for $20.00 per share results in $200,000 (10,000 shares * $20/share), issuing bonds for $500,000, and paying dividends of $85,000. Adding the proceeds from the stock sale and bond issuance gives $700,000, and subtracting the dividends paid ($85,000) results in net cash from financing activities of $615,000.

Baker Corporation Conducted the Following Activities During 2001: (1)they Sold