Lexington Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.)1) Acquired $3,100 cash from issuing common stock.2) Borrowed $2,250 from a bank.3) Earned $3,150 of revenues.4) Incurred $2,410 in expenses.5) Paid dividends of $410.Lexington Company engaged in the following transactions during Year 2:1) Acquired an additional $550 cash from the issue of common stock.2) Repaid $1,335 of its debt to the bank.3) Earned revenues, $4,550.4) Incurred expenses of $2,770.5) Paid dividends of $700. What is the net cash flow from financing activities on Lexington's statement of cash flows for Year 2?
A) $150 outflow
B) $550 inflow
C) $1,485 outflow
D) $1,485 inflow
E) $150 outflow.

Question

Quizplus · Accepted Answer

To calculate the net cash flow from financing activities, we need to look at the cash inflows and outflows related to the issuance and repayment of debt and equity.

In Year 2:
- The cash inflow from issuing common stock was $550.
- The cash outflow from repaying the bank loan was $1,335.
- The cash outflow from paying dividends was $700.

Therefore, the net cash flow from financing activities is:
$550 - $1,335 - $700 = -$1,485 (outflow)

Lexington Company Engaged in the Following Transactions During Year 1