In preparing a company's statement of cash flows for the most recent year, Ransom Corp. reported the following information: $\begin{array}{llcc}
\text { Repayriert of outstardirg bords} &\$107,000 \
\text {Purchase of treasury stock } &62,000\
\text { Issuarnce of contruon stock }& 46,000&\
\text {Payment of cash dividends } &15\
\end{array}$
Net cash flows from financing activities for the year were:
A) $230,000 of net cash used.
B) $230,000 of net cash provided.
C) $108,000 of net cash used.
D) $138,000 of net cash used.
E) $138,000 of net cash provided.

Question

In preparing a company's statement of cash flows for the most recent year, Ransom Corp. reported the following information: $\begin{array}{llcc}
  \text { Repayriert of outstardirg bords} &\$107,000  \
 \text {Purchase of treasury stock  } &62,000\
 \text { Issuarnce of contruon stock }& 46,000&\
 \text {Payment of cash dividends } &15\
\end{array}$
 Net cash flows from financing activities for the year were:
A) $230,000 of net cash used.
B) $230,000 of net cash provided.
C) $108,000 of net cash used.
D) $138,000 of net cash used.
E) $138,000 of net cash provided.

Quizplus · Accepted Answer

In order to calculate the net cash flows from financing activities, we need to add up the cash inflows and cash outflows related to financing activities.

Cash inflows from financing activities: 
- Issuance of common stock: $46,000

Cash outflows from financing activities: 
- Repayment of outstanding bonds: $107,000 
- Purchase of treasury stock: $62,000 
- Payment of cash dividends: $15

Net cash flows from financing activities = Cash inflows - Cash outflows = $46,000 - ($107,000 + $62,000 + $15) = -$138,000

Since the net cash flows from financing activities is negative, it means that the company used cash for financing activities. Therefore, the correct answer is D) $138,000 of net cash used.

In Preparing a Company's Statement of Cash Flows for the Most