Question

Nash's Trading Post, LLC purchased treasury stock with a cost of $36900 during 2017. During the year, the company paid dividends of $13400 and issued bonds payable for proceeds of $586900. Cash flows from financing activities for 2017 total

$610400 net cash inflow.

$50300 net cash outflow.

$573500 net cash inflow.

$536600 net cash inflow.

Answer 1

Cash flows from financing activities includes all those transactions that results in an increase or decrease in financing of an organization

Purchase of treasury stock will result in a decrease in stockholder’s equity and thus is shown as a deduction in cash flows from financing activities

Payment of dividend results in a decrease in cash and is shown as a deduction in cash flows from financing activities

When bonds are issued, cash is received by the organization which is shown as an addition in cash flows from financing activities

So, the net result will be as follows for the above three transactions in sequence :

- $36,900 - $13,400 + $586,900

= $ 536,600 cash inflow from financing activities

So, as per above discussion, option D is the correct option