During the current year, Jamison Manufacturing had net income of $15,000 and pai
ID: 2534721 • Letter: D
Question
During the current year, Jamison Manufacturing had net income of $15,000 and paid dividends of $8,000. Jamison also borrowed $50,000 on January 1st and repaid $5,000 of the note during the year. Jamison’s net cash flows provided by financing activities is
A company’s inventory account decreased by $1,000 during the year. Which of the following would appear on the statement of cash flows prepared using the indirect method?
An addition under operating activities
On July 31st of the current year Bridges Industries borrowed $50,000 from the First National Bank. On December 31st the company made its first payment of $1,000, of which $900 was applied to principal and $100 was interest. How will these transactions be reported in the statement of cash flows?
Explanation / Answer
1. Net Cash flow from Financing activitives = $37000
Loans borrowed = 50000
Less: Dividends paid = (8000)
Less: Note Repaid = (5000)
Net cash flow from financing activities = $37000
2. Decrease in Inventory will be addition under operating activities as the same falls under decrease in current asset category.
3. Answer is option 2 i.e. under operating activites interest paid will be there $100 use , Under investing activities it is $0 and under financing activities it will be $50000 source from money borrowed & $900 use for loan repaid.
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