Crispy Corporation has net cash flow from financing activities for the last year of $20 million. The company paid $5 million in dividends last year. During the year, the change in notes payable on the balance sheet was an increase of $2 million, and change in common and preferred stock was an increase of $3 million. The end of year balance for long-term debt was $45 million. What was their beginning of year balance for long-term debt?
A) $15 million
B) $20 million
C) $25 million
D) $35 million

Question

Quizplus · Accepted Answer

The change in long-term debt is equal to the net cash flow from financing activities plus dividends paid minus the change in notes payable and the change in common and preferred stock. Therefore, the beginning of year balance for long-term debt is $45 million - $20 million + $5 million - $2 million - $3 million = $25 million.

Crispy Corporation Has Net Cash Flow from Financing Activities for the Last