How to Compute Financing Cash Flows In 20X2, net income of $180,000 was earned, and dividends of $80,000 were paid. Exhibit 14.2 showed the following information on financing transactions for Lemmons Company: Net Changes 20X1 20X2 Debit Credit Mortgage payable $100,000 $100,000 Common stock $75,000 75,000 Paid-in capital in excess of par 100,000 100,000 Retained earnings 365,000 465,000 100,000 Required: Compute the financing cash flows for 20X2.

Issuance of mortgage $100,000 [latex]a[/latex] Payment of dividends (80,000) [latex]b[/latex] Net cash from financing activities $ 20,000 [latex]a[/latex] The comparative balance sheets show that the only change in long-term debt and capital stock accounts is the apparent issue of a mortgage during 20X2. The proceeds from this mortgage should be shown as a source of cash in the financing section. [latex]b[/latex] Retained earnings, end of 20X1 $365,000 Net income (20X2) 180,000 Total $545,000 Less retained earnings, end of 20X2 465,000 Dividends paid in 20X2 $ 80,000

Question 14.5: How to Compute Financing Cash Flows In 20X2, net income of $...

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How to Compute Financing Cash Flows
In 20X2, net income of $180,000 was earned, and dividends of $80,000 were paid. Exhibit 14.2 showed the following information on financing transactions for Lemmons Company:

			Net Changes
	20X1	20X2	Debit	Credit
Mortgage payable		$100,000		$100,000
Common stock	$75,000	75,000
Paid-in capital in excess of par	100,000	100,000
Retained earnings	365,000	465,000		100,000

Required:
Compute the financing cash flows for 20X2.

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