Question

Please show all work.

Problem 7: Prepare the statement of cash flows from financing activities using the following company information: (10 points) 2020 2019 Cash $240,000 $ 230,500 Accounts Receivable 85,000 100,000 Prepaid Insurance 25,000 30,000 Prepaid Taxes 50,000 25,000 Equipment and Furniture 1,000,000 935,000 Accounts Payable 60,000 50,000 Salaries Payable 25,000 36,000 Mortgage Payable 985,000 1,250,000 Net Income 300,000 250,000 Depreciation Expense 135,000 165,000 Loss on sale of assets 15,500 0 Additional information No new loans were obtained The company issued 300 shares of common stock for $100,000 The company declared and paid $40,000 in dividends during the year The company purchased $300,000 in new equipment to expand operations O ооо

Answer 1

Preparation of Statement of Cash Flows From Financing Activities: Cash Outflow from Repayment of Mortgage Payable ($1,250,000 - $985,000) $ (265,000.00) Cash Inflow from Issue of Common Stock $ 100,000.00 Cash Outflow from Payment of Cash Dividends $ (40,000.00) Net Cash Outflow from Financing Activities $ (205,000.00) Note that Financing Activities section of Cash Flow Statement deals with cash rising from issue of equity or debt and payments of dividends, repayment of loans etc.