Wander Company's comparative balance sheet and income statement for last year appear below: The company declared and paid $39,000 in cash dividends during the year. The following questions pertain to the company's statement of cash flows.
-The net cash provided by (used in) financing activities last year was:
A) $10,000
B) $(10,000)
C) $49,000
D) $(49,000)

Question

Wander Company's comparative balance sheet and income statement for last year appear below:   The company declared and paid $39,000 in cash dividends during the year. The following questions pertain to the company's statement of cash flows.
-The net cash provided by (used in) financing activities last year was:
A) $10,000 
B) $(10,000) 
C) $49,000 
D) $(49,000)

Quizplus · Accepted Answer

The net increase in cash during the year was $19,000 (ending cash balance of $59,000 minus beginning cash balance of $40,000). The company paid $39,000 in cash dividends, which is a financing activity that reduces cash. Therefore, $39,000 of the $19,000 increase in cash must have come from financing activities. Since the net cash provided by financing activities is a negative $49,000, it means that the company raised $49,000 in cash from financing activities (issue of common stock or borrowing) and used $10,000 of that to pay off some debts or repurchase stock.

Wander Company's Comparative Balance Sheet and Income Statement for Last