Jarvis, Inc reported net income of $340000 for the year ended December 31,2011.

Question

Jarvis, Inc reported net income of $340000 for the year ended December 31,2011. Included in net income was a gain on early extinguishment of debt of $60,000 related to bonds payable with a book value of $1,200,000. Each of the following accounts increased during 2011:
Notes Receivables $45,000
Deferred Tax Liability $10,000
Treasury Stock $90,000
What is the amount of cash used by financing activities for Jarvis, Inc. for the year ended December 31,2011
a) $1,240,000
b) $1,230,000
c) $160,000
d) $195,000

Explanation / Answer

Cash flows from financing activities: Bonds payable                              $60,000 Deferred Tax Liability                      10,000 Treasury stock                                90,000                                                    _____________ Total cash used by financing activity                                          $160,000 Bonds payable                              $60,000 Deferred Tax Liability                      10,000 Treasury stock                                90,000                                                    _____________ Total cash used by financing activity                                          $160,000

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