Concept #1: Financing Activities Summary

Example #1: Financing Activities

Practice: Which of the following is a cash flow from financing activities?

Practice: The exchange of land worth $110,000 for 50,000 shares of common stock in the company would be an:

Practice: Turkey Company is preparing its Statement of Cash Flows and gathered the following information: 

1. Since the previous year: the cash account increased by $35,000, land increased by $40,000, Equipment decreased by $15,000, Accumulated Depreciation – Equipment increased by $6,000, Retained Earnings increased by $340,000, and Bonds Payable increased by $100,000, 

2. Depreciation expense for Equipment totaled $16,000. 

3. Equipment with a purchase price of $15,000 was sold for a $2,000 gain. 

4. Turkey loaned $24,000 to Potatoes Company signing a long-term note receivable. 

5. Net income was $420,000. 

6. Turkey issued 100,000 shares of $5 par value common stock. The additional paid-in capital from this transaction was $300,000. 

What is Turkey Company’s net cash flow from financing activities?

Additional Problems
Garmin Corporation paid $10,000 in 2006 to purchase treasury stock.Garmin should report the purchase of treasury stock on the Statement of Cash Flows as part of: a. Operating activities b. Investing activities c. Financing activities d. No activities, because the purchase of treasury stock would not be reported on the Statement of Cash Flows.
Consider the following transactions: What was the net cash inflow from financing activities? A. $1,685,000 B. $1,595,000 C. $1,560,000 D. $840,000
Which of the following statements is correct? a. The payment of a cash dividend reduces net income. b. Cash received from an issuance of stock to stockholders is reported as a financing cash flow within the statement of cash flows. c. Providing services to a customer on account doesn't impact net income. d. Interest payments are reported within the statement of cash flows as a financing activity.
XYZ Company issued 10,000 shares of $1 par value common stock for $30,000. How would this be classified on the statement of cash flows?
Garmin Corporation paid $10,000 in 2006 to purchase treasury stock. Garmin should report the purchase of treasury stock on the Statement of Cash Flows as part of: a. Operating activities b. Investing activities c. Financing activities d. No activities, because the purchase of treasury stock would not be reported on the Statement of Cash Flows.
Borderline Corp. borrowed $1.2 million in short-term notes and $6.4 million in long-term notes. The company repaid $4.8 million of long-term notes plus $.6 million of interest. Borderline issued $8.7 million of common stock and paid a cash dividend of $1.2 million. Net cash flow from financing activities equals  A. $9.7 million net cash inflow. B. $10.3 million net cash inflow. C. $9.1 million net cash inflow. D. $7.9 million net cash inflow.
An example of a financing activity is a) The sale of merchandise for cash. b) The issue of stock for cash. c) The sale of used equipment for cash. d) The purchase of a building.
A corporation issued $2,000,000 of 20-year bonds for cash at 108. How would this transaction be reported in the statement of cash flows? a) $2,000,000 inflow in cash flows from financing activities b) $2,000,000 inflow in cash flows from investing activities c) $2,160,000 inflow in cash flows from financing activities d) $2,160,000 inflow in cash flows from investing activities