Questions: Using the indirect method to prepare the statement of cash flows, Taylor and Company issued a new note payable for cash of 21,000 and paid cash dividends of 4,0 by / used for financing activities is A. (45,000) B. (11,000) C. 11,000 D. 45,000

Using the indirect method to prepare the statement of cash flows, Taylor and Company issued a new note payable for cash of 21,000 and paid cash dividends of 4,0 by / used for financing activities is
A. (45,000)
B. (11,000)
C. 11,000
D. 45,000

Transcript text: Using the indirect method to prepare the statement of cash flows, Taylor and Company issued a new note payable for cash of $\$ 21,000$ and paid cash dividends of $\$ 4,0$ by / used for financing activities is $\qquad$ A. $\$(45,000)$ B. $\$(11,000)$ C. $\$ 11,000$ D. $\$ 45,000$

Solution

Solution Steps

To determine the net cash provided by or used for financing activities, we need to consider the cash inflows and outflows related to financing. In this case, Taylor and Company issued a new note payable for cash (an inflow) and paid cash dividends (an outflow). The net cash flow from financing activities is the difference between these two amounts.

Step 1: Identify Cash Inflows and Outflows

Taylor and Company issued a new note payable for cash, which is a cash inflow of $ \$21,000 $. They also paid cash dividends, which is a cash outflow of $ \$4,000 $.

Step 2: Calculate Net Cash Provided by or Used for Financing Activities

The net cash provided by or used for financing activities is calculated as the difference between the cash inflow and the cash outflow: \[ \text{Net Cash Financing} = \text{Cash Inflow} - \text{Cash Outflow} \] Substituting the given values: \[ \text{Net Cash Financing} = 21000 - 4000 = 17000 \]