Jones Industries received $800,000 from issuing shares of its common stock and $650,000 from issuing bonds. During the year, Jones Industries also paid dividends of $110,000. How are the effects of these transactions reported on the statement of cash flows? Use the minus sign to indicate cash outflows, cash payments, decreases in cash and for any adjustments, if required. If a transaction has no effect on the statement of cash flows, select "No effect" from the drop down menu and leave the amount box blank.

Question

Transactions Action Amount
Cash received from issuing common stock
$fill in the blank 2
Cash received from issuing bonds
$fill in the blank 4
Cash paid for dividends

Answer 1

To report the effects of the transactions on the statement of cash flows, you would categorize them under financing activities. Here’s how each transaction would be reported:

1. Cash received from issuing common stock:

   • Action: Cash inflow from financing activities
   • Amount: $800,000

2. Cash received from issuing bonds:

   • Action: Cash inflow from financing activities
   • Amount: $650,000

3. Cash paid for dividends:

   • Action: Cash outflow from financing activities
   • Amount: -$110,000 (indicating a cash outflow)

Putting this information together:

Transactions                          Action                                  Amount
Cash received from issuing common stock           Cash inflow from financing activities                  $800,000
Cash received from issuing bonds                           Cash inflow from financing activities                  $650,000
Cash paid for dividends                                           Cash outflow from financing activities                -$110,000