During 2012, Victoria Group: (1) received cash of $5,000 billed to a customer in

Question

During 2012, Victoria Group: (1) received cash of $5,000 billed to a customer in 2011; (2) earned $20,000 of net income; (3) paid interest of $6,000 on a corporate bond issued; (4) paid dividends of $8,000 to its stockholders; (5) borrowed $40,000 from a local bank; and (6) purchased its own shares of common stock for $10,000. What is Victoria Group's cash flow from financing activities in 2012?

a. $40,000.

b. $30,000.

c. $22,000. <---- may you please explain if this is correct or not

d. $16,000.

Explanation / Answer

financing activities include: 4. paying dividends of 8000 5. borrowing 40,000 6. purcashing treasury stock for 10,000 40,000 -8,000 -10,000 =22,000 (note: number 3 is not because paying interest is an operating activity) ANswer: c, 22,000

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