Question

Brief Exercise 11-31 (Algorithmic) Determining Net Cash Flow from Financing Activities Madison Company reported the following information: Notes payable Common stock Retained earnings 12/31/2019 $95,000 120,000 20,000 12/31/2018 $75,000 80,000 36,000 Madison reported net income of $36,000 for the year ended December 31, 2019. In addition, Madison repaid $63,000 of the notes payable during 2019. Required: Compute net cash flow from financing activities. Use a minus sign to indicate negative cash flows (outflows). $ 31,000 x

Answer 1

WORKING NOTES:
CALCULATION OF DIVIDEND PAID
Beginning balance of retained earnings	$             36,000
Add: Net income of the year	$             36,000
Less: Ending balance	$             20,000
Dividend Paid	$             52,000
SOLUTION : 1
Statement of Cash Flows
	Amount in $	Amount in $
Cash flows from Financing activities
Issue of Notes Payable (Net)	$             20,000
Dividend Paid	$            -52,000
Issue of Common Stock	$             40,000
Net cash used in financing activities		$                8,000
Answer = $ 8,000