Favor, Inc.’s capital and related transactions during 20X5 were as follows:
- On January 1, $1,000,000 of 5-year 10% annual interest bonds were issued to Cover Industries in exchange for old equipment owned by Cover.
- On June 30, Favor paid $50,000 of interest to Cover.
- On July 1, Cover returned the bonds to Favor in exchange for $1,500,000 par value 6% preferred stock.
- On December 31, Favor paid preferred stock dividends of $45,000 to Cover.
Favor, Inc.’s cash flow from financing (CFF) for 20X5 (assume U.S. GAAP) is:
A. −$45,000.
B. −$95,000.
C. −$1,045,000.
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