The Gopher Company’s transactions during 2018 included the following: Paid cash

Question

The Gopher Company’s transactions during 2018 included the following:

Paid cash dividends of $1,200,000
Paid cash toward reducing a long-term note payable $900,000
Issued common stock in exchange for a building $750,000
Paid cash for bond interest $50,000
Bond discount amortization was recorded for $2,250
Issued preferred stock for cash $250,000
Sold a long-term stock investment with a book value of $79,000 for $123,000 cash
Sold equipment with a book value of $90,000 for cash. The sale resulted in a $15,000 loss.
Issued bonds with a maturity value of $2,000,000 in exchange for $1,950,000 cash

Required:

Determine the net cash flow from investing activities for 2018.

Determine the net cash flow from financing activities for 2018.

Explanation / Answer

Net cashflows from investing activities: Sold long-term stock investment 123000 Sold equipment (90000-15000) 75000 198000 Net cashflows from financing activities: Paid cash dividends -1200000 Paid cash towards long-term note payable -900000 Issued preferred stock for cash 250000 Issue of bonds 1950000 100000 Notes: 1. Issued common stock in exchange for a building does not involve cash inflow or outflow 2.Paid cash for bond interest is an income statement item.Hence,it should be adjusted in operating cashflow. 3.Bond discount amortization has no effect on cashflow statement.

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