Question

Santa Fe Company was started on January 1, Year 1, when it acquired $9,000 cash by issuing common stock. During Year 1, the company earned cash revenues of $4,500, paid cash expenses of $3,750, and paid a cash dividend of $250. Based on this information, Options: The balance sheet at December 31, Year 1 would show total equity of $8,750. The Year 1 income statement would show net income of $500. The Year 1 statement of cash flows would show net cash inflow from operating activities of $4,500 The Year 1 statement of cash flows would show a net cash flow from financing activities of $8,750.

Answer 1

Answer is D.

Total Equity = Issue of Common Stock + Cash Revenues - Cash Expenses - Cash Dividend
Total Equity = $9,000 + $4,500 - $3,750 - $250
Total Equity = $9,500

Total Assets = Issue of Common Stock + Cash Revenues - Cash Expenses - Cash Dividend
Total Assets = $9,000 + $4,500 - $3,750 - $250
Total Assets = $9,500

Net Income = Cash Revenues - Cash Expenses
Net Income = $4,500 - $3,750
Net Income = $750

Cash Flows from Operating Activities = Cash Revenues - Cash Expenses
Cash Flows from Operating Activities = $4,500 - $3,750
Cash Flows from Operating Activities = $750

Cash Flows from Financing Activities = Issue of Common Stock - Cash Dividend
Cash Flows from Financing Activities = $9,000 - $250
Cash Flows from Financing Activities = $8,750

The Year 1 statement of cash flows would show a net cash flow from financing activities of $8,750.