During 2018, Stout Inc. had the following activities related to its financial op

Question

During 2018, Stout Inc. had the following activities related to its financial operations:

Carrying value of convertible preferred stock in Stout,

converted into common shares of Stout                                         $   540,000

Payment in 2018 of cash dividend declared in 2017 to

preferred shareholders                                                                        279,000

Payment for the early retirement of long-term bonds payable

(carrying amount $3,930,000)                                                          3,975,000

Proceeds from the sale of treasury stock (on books at cost of $387,000)                                                                                              450,000

The amount of net cash used in financing activities to appear in Stout's statement of cash flows for 2018 should be

Explanation / Answer

Payment of cash dividend, Payment for the early retairment of long term bonds payable and Sale of treasury stock are financing activities.

Net cash used in financing activities = (279,000) + (3,975,000) + 450,000

= (3,084,000)

The answer is C.

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