The Comparative Balance Sheet of Barry Company for Years 1 $\$ 75,800$

question 102

Multiple Choice

The comparative balance sheet of Barry Company for Years 1 and 2 ended December 31 appears below in condensed form:
Additional data for the current year are as follows: (a) Net income, $\$ 75,800$ .
(b) Depreciation reported on income statement, $\$ 38,000$ .
(c) Fully depreciated equipment costing $\$ 60,000$ was scrapped, no salvage, and equipment was purchased for $\$ 150,000$ .
(d) Bonds payable for $\$ 75,000$ were retired by payment at their face amount.
(e) 2,500 shares of common stock were issued at $\$ 30$ for cash.
(f) Cash dividends declared and paid, $\$ 40,000$ .
(g) Investments of $\$ 100,000$ were sold for $\$ 125,000$ .
What are the net cash flows from operating, investing, and financing activities for Year 2?

• A) operating: $94,500; investing: ($25,000); financing: ($40,000)
• B) operating: $54,500; investing: ($25,000); financing: $0
• C) operating: $94,500; investing: ($150,000); financing: $85,000
• D) operating: $134,200; investing: ($63,000); financing: ($40,000)

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Definitions:

Payment

The transfer of money or goods from one party to another as a fulfillment of an obligation or settlement of a debt.

Ownership

The right to possess, use, and control a property or item, encompassing both tangible and intangible assets.

Promissory Estoppel

A legal principle preventing a party from going back on a promise, which another party relied upon, even if there was no formal contract.

Consideration

In contract law, it is something of value exchanged by the parties involved in a contract, making the agreement legally binding.