In Rooney Company, Treasury Stock increased $30,000 from a cash purchase, and Retained Earnings increased $80,000 as a result of net income of $124,000 and cash dividends paid of $44,000. Net cash used by financing activities is:
A) $30,000.
B) $44,000.
C) $110,000.
D) $74,000.

Question

Quizplus · Accepted Answer

Treasury Stock increased by $30,000, indicating cash was used to purchase the stock, which is a financing activity. Retained Earnings increased by $80,000, which includes net income of $124,000 and dividends paid of $44,000. Dividends paid are a financing activity, so the net cash used by financing activities is $44,000 (dividends paid) minus $30,000 (treasury stock purchased), which equals $14,000. Therefore, the net cash used by financing activities is $14,000 added to the $30,000 used to purchase treasury stock, which equals $74,000.

In Rooney Company, Treasury Stock Increased $30,000 from a Cash