Use the following financial data on Enterprise:
a. Sale of equipment $32,000
b. Loss on equipment sale $9,000
c. Dividends paid $12,500
d. Purchase of an office suite $104,000
e. Common stock repurchase $45,000
f. Dividends received from investments $8,500
g. Interest received on Treasury bonds $1,200
h. Supplier accounts paid $3,700
i. Cash collection from customers $14,200
j. Ending cash balance $98,000
In the above question, the financing cash flow is ________.
Click on the arrows to vote for the correct answer
A. B. C. D.C
Items c and e are the financing cash flows.
To determine the financing cash flow, we need to identify the transactions related to financing activities. These activities involve raising and repaying capital from investors and creditors.
From the given financial data, the following transactions are relevant to financing activities:
b. Loss on equipment sale $9,000: This represents a loss incurred on the sale of equipment, which is not directly related to financing activities.
e. Common stock repurchase $45,000: This transaction involves the repurchase of common stock, which is a financing activity. When a company repurchases its own stock, it uses cash to buy back the shares from investors.
c. Dividends paid $12,500: Dividends paid to shareholders represent a cash outflow and are considered a financing activity.
Therefore, the relevant financing cash flows are the common stock repurchase (-$45,000) and the dividends paid (-$12,500).
To calculate the total financing cash flow, we sum up these amounts:
Financing Cash Flow = Common stock repurchase + Dividends paid = -$45,000 + (-$12,500) = -$57,500
Therefore, the financing cash flow is -$57,500.
Among the given answer choices, the correct option is C. -$57,500.