Company X paid Company Y $2.85 million for a new plant. During the same accounti

Question

Company X paid Company Y $2.85 million for a new plant. During the same accounting period, Company X experienced the following changes in its balance sheet: Cash decreased by $358,000, Accounts Receivable increased by $322,800, Inventory increased by $277,300, Property, Plant, and Equipment increased by $754,400, and Bonds Payable increased by $3 million. The net cash flow provided by financing activities is: a)An inflow of $2.85 million. b)An outflow of $358,000. c)An inflow of $3 million. d)An inflow of $754,400.

Explanation / Answer

Financing activity - Increase in Bonds payable by 3,000,000.

Increase in Bonds payable is a cash inflow.

The answer is C.

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