Question

) Basha Company

                                         Income Statement

                         For the year ended December 31, 2019

Sales	$70,000
Cost of goods sold	40,000
Gross margin	30,000
Depreciation expense	5,000
Other operating expenses	15,000
Operating income	10,000
Loss on sale of equipment	4,000
Income before taxes	6,000
Income tax expense	2,400
Net income	$3,600

Additional data on activities during 2019 are as follows:

•   During 2019, Basha Company sold used equipment for $3,000 that had cost $15,000 with accumulated depreciation of $8,000.

•   New equipment was purchased for $12,000 cash.

•   Cash dividends totaling $8,000 were paid.

•   Long-term investments that had cost $18,000 when purchased were sold for $18,000.

•   Common stock was issued for $10,000.

Required:

Prepare the financing activities section of the statement of cash flows.

Answer 1

financing activities section is a part of cash flow statement that records the cash used to fund the company. It records debt, equity and dividend.

During 2019, Basha Company sold used equipment for $3,000 that had cost $15,000 with accumulated depreciation of $8,000. - It is an investing activity

New equipment was purchased for $12,000 cash. -Investing activity

Cash dividends totaling $8,000 were paid. - Financing activity

•   Long-term investments that had cost $18,000 when purchased were sold for $18,000.-Investing activity

•   Common stock was issued for $10,000.-Financing activity

Partial cash flow statement of Basha Company
Cash flow from financing actvities
Dividend paid	($8,000)
Cash received from issue of common stock	$10,000
Net cash flow from investing activities	$2,000[$10,000-$8,000]