Wisconsin Company reported selected accounts as follows:
$$\begin{array} { l l l }
& \text { December 31,2014 } & \text { December 31,2015 } \
\text { Accounts payable } & \$ 20,000 & \$ 30,000 \
\text { Gonds payable } & \$ 40,000 & \$ 28,000 \
\text { Common stock } & \$ 20,000 & \$ 24,000
\end{array}$$
Dividends of $8,800 were declared and paid by December 31,2015.What was the net cash flow from financing activities for the year ended December 31,2015?
A) $6,800 cash outflow
B) $16,800 cash outflow
C) $6,800 cash inflow
D) $16,800 cash inflow

Question

Wisconsin Company reported selected accounts as follows:
$$\begin{array} { l l l } 
& \text { December 31,2014 } & \text { December 31,2015 } \
\text { Accounts payable } & \$ 20,000 & \$ 30,000 \
\text { Gonds payable } & \$ 40,000 & \$ 28,000 \
\text { Common stock } & \$ 20,000 & \$ 24,000
\end{array}$$
Dividends of $8,800 were declared and paid by December 31,2015.What was the net cash flow from financing activities for the year ended December 31,2015?
A) $6,800 cash outflow
B) $16,800 cash outflow
C) $6,800 cash inflow
D) $16,800 cash inflow

Quizplus · Accepted Answer

The net cash flow from financing activities is calculated by considering changes in accounts that involve financing activities, such as common stock and bonds payable, and including dividends paid. Here, the common stock increased by $4,000 ($24,000 - $20,000), indicating cash inflow from issuing stock. The bonds payable decreased by $12,000 ($28,000 - $40,000), indicating cash outflow for repaying debt. Dividends paid amounted to an $8,800 cash outflow. Therefore, the net cash flow from financing activities is $4,000 - $12,000 - $8,800 = -$16,800, indicating a cash outflow of $16,800.

Wisconsin Company Reported Selected Accounts as Follows Dividends of $8,800 Were Declared and Paid by December 31,2015