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Cameron Company was incorporated on January 1, 2016. The following events apply to the company's first...

Cameron Company was incorporated on January 1, 2016. The following events apply to the company's first year of operations.

i. Issued 3,000 shares of $10 par value common stock at a market price of $25 per share.

ii. Earned $45,000 cash revenue.

iii. Incurred $30,000 of cash expenses

iv. Declared a $5,000 cash dividend

v. Paid the cash dividend declared in Event iv.

vi. Bought back 800 shares of the $10 par value common stock for $20 per share

Use the following information to answer these questions

a) Based only on this information, what is the amount of total equity that Cameron will report on its December 31,2016 balance sheet?

a. $54,000

b. $59,000

c. $69,000

d. $85,000

b) Based only on this information, what is the amount of net cash from financing activities that Cameron will report on its Statement of Cash Flows for December 31, 2016?

a. $54,000

b. $70,000

c. $85,000

d. $96,000

Business   Accounting   
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Homework Answers

Answer #1

a) Calculate total equity

Paid in capital
Common Stock (3000*10) 30000
Additional paid in capital (3000*15) 45000
Total paid in capital 75000
Retained earnings (45000-30000-5000) 10000
Total 85000
Less: Treasury stock (800@20) -16000
Total equity 69000

So answer is c) $69000

b) Cash flow from financing activities

Issue common Stock (3000*25) 75000
Dividend paid -5000
Purchase treasury stock (800*20) -16000
Net cash flow from financing activities 54000

So answer is a) $54000

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