Lexington Company engaged in the following transactions during Year 1, its first year of operations. (Assume all transactions are cash transactions.)Acquired $6,000 cash from issuing common stock.Borrowed $4,400 from a bank.Earned $6,200 of revenues.Incurred $4,800 in expenses.Paid dividends of $800.Lexington Company engaged in the following transactions during Year 2:Acquired an additional $1,000 cash from the issue of common stock.Repaid $2,600 of its debt to the bank.Earned revenues, $9,000.Incurred expenses of $5,500.Paid dividends of $1,280.What is the net cash flow from financing activities on Lexington's statement of cash flows for Year 2?
A) $2,880 outflow
B) $2,880 inflow
C) $1,000 outflow
D) $1,000 inflow

Question

Quizplus · Accepted Answer

Net cash flow from financing activities for Year 2 includes cash inflow from issuing common stock ($1,000) and cash outflows from repaying debt ($2,600) and paying dividends ($1,280). The net cash flow is $1,000 - $2,600 - $1,280 = -$2,880, indicating an outflow.

Lexington Company Engaged in the Following Transactions During Year 1