In preparing its cash flow statement for the year ended December 31, 2011, Green
ID: 2486928 • Letter: I
Question
In preparing its cash flow statement for the year ended December 31, 2011, Green Co. gathered the following data:
Gain on sale of land $12,000
Proceeds from sale of land 20,000
Purchase of Black, Inc., bonds (face value $200,000) 360,000
Amortization of bond discount 4,000
Cash dividends declared 90,000
Cash dividends paid 76,000
Proceeds from sales of common stock (carrying value $130,000) 150,000
In its December 31, 2011, statement of cash flows, what amount should Green report as net cash from financing activities?
Cash dividends paid 76,000 Proceeds from sales of common stock (carrying value $130,000) 150,000
A. $74,000
B. $54,000
C. $60,000
D. $40,000
Explanation / Answer
The amount of net cash from financing activities should b computed as follows:
Net cash from financing activities = Proceeds from sale of common stock - Cash dividends paid
= $150,000 - $76,000
= $74,000
Only, issue of common stock and payment of cash dividends are financing activities. All other information shall not be used in determining cash flows from financing activities.