Partial balance sheets for ABC Company and additional information are provided below.
ABC Company, Partial Balance Sheets, As of December 31
2009 2008
Equipment $100,000 $75,000
Accumulated depreciation (25,000) (20,000)
Common stock, $5 par 180,000 100,000
Paid in capital 20,000
Retained earnings 40,000 30,000
Additional information for 2009:
July 1: Issued 8,000 shares of common stock for cash.
July 1: Purchased new equipment for cash.
December 31: Paid cash dividends of $20,000.
Prepare the financing activities section of the statement of cash flows for 2009
To prepare the financing activities section of the statement of cash flows for 2009, we need to analyze the changes in the company's long-term liabilities and equity accounts during the year. The financing activities section focuses on cash flows related to the company's financing sources, such as issuing or repurchasing common stock, borrowing or repaying long-term debt, and paying dividends.
Let's go through the information provided and determine the relevant financing activities for ABC Company during 2009:
1. July 1: Issued 8,000 shares of common stock for cash.
- This transaction represents the issuance of new equity, resulting in an increase in cash. We need to determine the cash amount received from this stock issuance.
2. July 1: Purchased new equipment for cash.
- Although this transaction represents a cash outflow, it is not considered a financing activity. It falls under the investing activities section of the statement of cash flows because it involves the acquisition of long-term assets.
3. December 31: Paid cash dividends of $20,000.
- This transaction represents the distribution of cash to shareholders as dividends. It is considered a financing activity because it affects the company's retained earnings, a component of equity.
Based on the provided information, we can now calculate the financing activities section of the statement of cash flows for ABC Company for 2009:
Financing Activities:
- Cash received from issuance of common stock (July 1) = 8,000 shares x $5 par value per share = $40,000
- Cash paid as dividends (December 31) = $20,000
Therefore, the financing activities section of the statement of cash flows for ABC Company for 2009 would be as follows:
Financing Activities:
Cash received from issuance of common stock $40,000
Cash paid as dividends ($20,000)
Net cash provided by financing activities $20,000
Please note that we did not have enough information to include any long-term debt transactions in the statement above. If there were any additional debt borrowings or repayments, they would also need to be considered.