Statement of Cash Flows - Cash from Financing Activities: Natural Lite, Inc. reported the following items during fiscal 2010. The firm purchased marketable securities of $87,500, paid down a long-term loan in the amount of $650,000, purchased $4,250,000 of new equipment. The firm also sold $6,250,000 of common stock, paid $350,225 in dividends to its common shareholders, and repurchased $1,250,000 of common stock in the open market. What is the net cash provided by financing activities? (Round off to the nearest)

Question

Quizplus · Accepted Answer

The net cash provided by financing activities is calculated as the sum of all the cash inflows and outflows related to financing activities. 
Cash inflows:
- Sale of common stock - $6,250,000
- Total dividends paid to common shareholders - $350,225

Cash outflows:
- Repurchase of common stock - $1,250,000
- Payment of long-term loan - $650,000

Therefore, the net cash provided by financing activities is: 
Net cash = ($6,250,000 + $350,225) - ($1,250,000 + $650,000) = $4,700,225 - $1,900,000 = $2,800,225

The nearest answer choice to $2,800,225 is C) $3,999,775, which is the best answer.