High School

During the year, Next Tec Corporation had the following cash flows:

- Receipt from customers: $13,000
- Receipt from the bank for long-term borrowing: $7,200
- Payment to suppliers: $5,400
- Payment of dividends: $1,800
- Payment to workers: $2,200
- Payment for machinery: $10,500

What amount would be reported for net financing cash flows on the Statement of Cash Flows?

Answer :

Final answer:

The net financing cash flows for Next Tec Corporation, calculated from the given cash inflows and outflows, amounts to $5,400.

Explanation:

The subject question pertains to the calculation of 'Net Financing Cash Flows' in the Statement of Cash Flows for Next Tec Corporation. In this scenario, two kinds of cash flows are related to financing activities: the 'receipt from the bank for long-term borrowing' and the 'payment of dividends. Therefore, the net financing cash flows can be calculated as follows:

  • Receipt from the bank for long-term borrowing = $7,200
  • Payment of dividends = $1,800

The net financing cash flow equals the cash inflow from borrowing minus the cash outflow from dividends. In this case, it will be:

Net financing cash flow = $7,200 - $1,800 = $5,400.

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