Question

The following selected account balances were taken from ABC Company's general ledgers for 2019: January 1, 2019 Inventory 74,000 Accounts payable 50,000 Salaries payable 9,000 Investments 68,000 Accounts receivable 69,000 Land 58,000 Notes payable 195,000 Unearned revenue 17,000 Common stock 100,000 Retained earnings December 31, 2019 56,000 28,000 4,000 75,000 35,000 88,000 120,000 25,000 190,000 63,000 23,000 The following information was taken from ABC Company's 2019 income statement: Sales revenue Cost of goods sold Salaries expense Net income $420,000 300,000 68,000 $ 52,000 Calculate ABC Company's net cash flow from financing activities for 2019. If your answer is negative, place a minus sign in front of your answer with no spaces in between (e.g., -1234).

Answer 1

Issue of share (-) Decrease in notes payable (-) Payment of dividend Net Cash flow from Financing activities 90,000 (75,000) (12,000) 3,000

Issue of share - Common stock increased during the year - 90,000 - this will be due to issue of new share - Issue of shares will give cash inflow to the company

repayment of notes payable - there is reduction in notes payable, which shows that Notes were repaid during the year - this is a cash outflow to the company

Payment of dividend - Retained earnings' closing balance increased to the extend of 40,000 and the company earned a net income of 52,000 during the year which means the company issued dividend of 12,000 (52,000 -40,000) during the year - this is a cash outflow to the company

No other details in balance sheet will affect the net cash flow from Financing activities.