D is corrent. Financing activities include all cash flows involving liabilities and equity, other than operating items. The only item given which is not classified as a cash flow from financing activities is the conversion of preferred stock into common stock ($120,000). This is a noncash item, reported in a separate schedule at the bottom of the statement of cash flows. The other items are cash financing activities, resulting in net cash used in financing activities of $717,000.| Cash paid to retire bonds payable | $(750,000) | | Payment of cash dividend | (62,000) | | Sale of treasury stock | 95,000 | | | $(717,000) |
Note that the preferred dividends were a cash payment in year 2, not in year 1 when declared. For the other items, the important number is the cash flow, not the carrying value or cost.A is incorrect.Financing activities include all cash flows involving liabilities and equity, other than operating items. The only item given which is not classified as a cash flow from financing activities is the conversion of preferred stock into common stock ($120,000). This is a noncash item, reported in a separate schedule at the bottom of the statement of cash flows. The other items are cash financing activities, resulting in net cash used in financing activities of $717,000.| Cash paid to retire bonds payable | $(750,000) | | Payment of cash dividend | (62,000) | | Sale of treasury stock | 95,000 | | | $(717,000) |
Note that the preferred dividends were a cash payment in year 2, not in year 1 when declared. For the other items, the important number is the cash flow, not the carrying value or cost.B is incorrect. Financing activities include all cash flows involving liabilities and equity, other than operating items. The only item given which is not classified as a cash flow from financing activities is the conversion of preferred stock into common stock ($120,000). This is a noncash item, reported in a separate schedule at the bottom of the statement of cash flows. The other items are cash financing activities, resulting in net cash used in financing activities of $717,000.| Cash paid to retire bonds payable | $(750,000) | | Payment of cash dividend | (62,000) | | Sale of treasury stock | 95,000 | | | $(717,000) |
Note that the preferred dividends were a cash payment in year 2, not in year 1 when declared. For the other items, the important number is the cash flow, not the carrying value or cost.C is incorrect. Financing activities include all cash flows involving liabilities and equity, other than operating items. The only item given which is not classified as a cash flow from financing activities is the conversion of preferred stock into common stock ($120,000). This is a noncash item, reported in a separate schedule at the bottom of the statement of cash flows. The other items are cash financing activities, resulting in net cash used in financing activities of $717,000.| Cash paid to retire bonds payable | $(750,000) | | Payment of cash dividend | (62,000) | | Sale of treasury stock | 95,000 | | | $(717,000) |
Note that the preferred dividends were a cash payment in year 2, not in year 1 when declared. For the other items, the important number is the cash flow, not the carrying value or cost. |
