Given the following financial statements for ARGON Corporation,and assuming that ARGON paid a common dividend of $80,000 in 2010,what is the company's financing cash flow for 2010?

A) -$10,000
B) -$15,000
C) -$65,000
D) -$70,000

Question

Given the following financial statements for ARGON Corporation,and assuming that ARGON paid a common dividend of $80,000 in 2010,what is the company's financing cash flow for 2010?

A) -$10,000 
B) -$15,000 
C) -$65,000 
D) -$70,000

Quizplus · Accepted Answer

The financing cash flow can be calculated as:
Financing Cash Flow = Dividends Paid - Net Increase in Debt - Net Increase in Equity
We are given dividends paid = $80,000. Looking at the balance sheet, we see that there is a net increase in debt of $10,000 and a net increase in equity of $60,000.
Therefore, Financing Cash Flow = $80,000 - $10,000 - $60,000 = -$70,000. 
Hence, the correct answer is (D).

Given the Following Financial Statements for ARGON Corporation,and Assuming That