Cole Company began operations on January 1, 2011. During 2011, the company engaged in the...

Question:

Cole Company began operations on January 1, 2011. During 2011, the company engaged in the following cash transactions:

  • 1) issued stock for $30,000
  • 2) borrowed $40,000 from its bank
  • 3) sold merchandise for $32,000
  • 4) paid back $11,700 of the bank loan
  • 5) paid rent expense for $4,550
  • 6) purchased equipment costing $7,550
  • 7) paid $3,000 dividends to stockholders
  • 8) paid employees' salaries, $12,700

What is Cole's cash flow from financing activities?

A) Inflow of $59,450

B) Inflow of $55,300

C) Outflow of $19,250

D) Outflow of $7,550

Cash Flow:

Cash flow may represent a cash inflow a cash outflow. A cash inflow is an income to the business while a cash outflow is an expense to the business. A business can earn cash flow from financing activities. Financing activities include:

  1. Issuance of stocks.
  2. Debt financing.

Answer and Explanation:

The correct answer is (B) Inflow of $55,300

The cash flow from financing activities refers to the money that is raised by a business from various sources. Therefore cashflow from financing activities include:

Details Amount
Stock issuance 30,000
Bank loan 40,000
Less Repment of loan (11,700)
Less Dividends paid (3,000)
Cash flow from Financing activities $55,300

Learn more about this topic:

Loading...
What Is Financing? - Definition & Types

from Corporate Finance: Help & Review

Chapter 8 / Lesson 7
111K

Related to this Question

Explore our homework questions and answers library