Avatar Company Uses the Indirect Method to Prepare Its Statement

question 8

Multiple Choice

Avatar Company uses the indirect method to prepare its statement of cash flows. Please refer to the following information for the year 2014:
$$\begin{array} { l r } \text { Long-term notes payable, beginning balance } & \$ 90,000 \\\text { Long-term notes payable, ending balance } & 84,000 \\\text { Common stock, beginning balance } & 2,000 \\\text { Common stock, ending balance } & 30,000 \\\text { Retained earnings, beginning balance } & 74,000 \\\text { Retained earnings, ending balance } & 113,000 \\\text { Treasury stock, beginning balance } & 5,000 \\\text { Treasury stock, ending balance } & 8,000\end{array}$$
• No stock was retired.
• No treasury stock was sold.
• During 2014, the company repaid $40,000 of long-term notes payable.
• During 2014, the company borrowed $34,000 on a new note payable.
• Net income for the year was $49,000.
How much was the net cash flow from financing activities?

• A) $59,000 positive cash flow
• B) $42,000 positive cash flow
• C) $9,000 negative cash flow
• D) $9,000 positive cash flow

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