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 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:
- Issuance of stocks.
- 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...
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fromChapter 8 / Lesson 7