Question

Hagag Company uses the indirect method to prepare its statement of cash flows. Please refer to...

Hagag Company uses the indirect method to prepare its statement of cash flows. Please refer to the following sections of the company’s comparative balance sheet and complete the fourth column to show the increase or decrease for each item listed. Please use the correct sign for each item to gain the full mark assigned (for example if the figure is negative, this must be clearly stated with brackets or with the minus sign):

2014

2013

Increase/decrease

Accounts payable

$ 4,000

$ 6,000

Accrued liabilities

2,000

1,000

Long-term notes payable

84,000

90,000

Total liabilities

$ 90,000

$ 97,000

Common stock

30,000

2,000

Retained earnings

113,000

74,000

Treasury stock

(8,000)

(5,000)

Total equity

$135,000

$ 71,000

Total liabilities and equity

$225,000

$168,000

The company also provided the following additional information:

​•​No stock was retired.

​•​No treasury stock was sold.

​•​During 2014, the company repaid $40,000 of long-term notes payable.

​•​During 2014, the company borrowed $34,000 on a new note payable.

​•​Net income for the year was $49,000.

From the info presented above, prepare the financing section of the statement of cash flows using the following format:

Financing activities:

Issuance of stock

Purchase of treasury stock

Sale of treasury stock

Borrowing on notes payable

Repayments of notes   payable

Payment of dividends

Net cash from financing activities

Homework Answers

Answer #1
Cash flow from financing activities
Issuance of stock [30000-2000] $          28,000
Purchase of treasury stock $           -3,000
Sale of treasury stock $                    -  
Borrowing on notes payable $          34,000
Repayment of notes payable $         -40,000
Payment of dividends (74000+49000-113000) $         -10,000
Net cash from financing activities $             9,000
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