Q15BE. - Intermediate Accounting (Kieso)

Question

Use the information presented in BE5-14 for Martinez Corporation to compute the net cash used (provided) by financing activities.

BE5-14 (L05) Martinez Corporation engaged in the following cash transactions during 2017. 

Sale of land and building $191,000 

Purchase of treasury stock 40,000 

Purchase of land 37,000 

Payment of cash dividend 95,000 

Purchase of equipment 53,000 

Issuance of common stock 147,000 

Retirement of bonds 100,000 

Compute the net cash provided (used) by investing activities.

Step-by-Step Solution

Answer

The cash used in financing activities is equal to $88,000.

Definition of Financing Activities

The capital generates activities that include the issue of securities, either debt or equity, which are considered financing activities. It also provides for the redemption of securities issued.

Financing Activities

Particular	Amount $
Purchase of treasury stock	($40,000)
Payment of cash dividend	(95,000)
Issuance of common stock	147,000
Retirement of bonds	(100,000)
Cash used in financing activities	($88,000)