Question

# McCorey Corporation recorded the following events last year: Repurchase by the company of its own common...

McCorey Corporation recorded the following events last year:

 Repurchase by the company of its own common stock \$ 26,000 Sale of long-term investment \$ 45,000 Interest paid to lenders \$ 8,000 Dividends paid to the company's shareholders \$ 55,000 Collection by McCorey of a loan made to another company \$ 31,000 Payment of taxes to governmental bodies \$ 18,000

On the statement of cash flows, some of these events are classified as operating activities, some are classified as investing activities, and some are classified as financing activities.

Based solely on the information above, the net cash provided by (used in) financing activities on the statement of cash flows would be:

A. \$(152,000)

B. \$89,000

C. \$(81,000)

D. \$183,000

Answer : C = \$ ( 81,000)

:: Calculating Net cash provided by financing activity.

>> Net cash provided by financing activity = ( Repurchase of common stock ) + ( Dividends paid to the shareholders )

>> Net cash provided by financing activity = ( \$ 26,000 ) + ( \$ 55,000 )

>> Net cash provided by financing activity = ( \$ 81,000 ).

>> Sale of long term investment is an investing activity.

>> Interest paid to lenders is an operating activity.

>> Collection of loan is an investing activity.

>> Payment of tax to government bodies is operating activity.

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