During 2015, Stout Inc. had the following activities related to its financial op

Question

During 2015, Stout Inc. had the following activities related to its financial operations:

The amount of net cash used in financing activities to appear in Stout's statement of cash flows for 2015 should be

Carrying value of convertible preferred stock in Stout, converted into common shares of Stout $  360,000 Payment in 2015 of cash dividend declared in 2014 to preferred shareholders 186,000 Payment for the early retirement of long-term bonds payable (carrying amount $2,620,000) 2,650,000 Proceeds from the sale of treasury stock (on books at cost of $258,000) 300,000

Explanation / Answer

Net cash used in financing activity is Payment in 2015 of cash dividend declared in 2014 to preferred shareholders 186000 Add : Payment for the early retirement of long-term bonds payable 2650000 Less : Proceeds from the sale of treasury stock 300000 Net cash used in financing activity 2536000 Hence 3rd option is correct

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