Business, 06.08.2019 02:30, youngdelvin123
In january of last year, newton inc. sold 15,000 shares of its own common stock for $180,000. ten months later, newton repurchased 5,000 of those shares at a price of $11 per share. when compiling its statement of cash flows for the year, newton should record which of the following entries in relation to these stock transactions, and why? (a) both a $180,000 cash inflow and a $55,000 cash outflow should be recorded in the financing section because both transactions involve stockholders' equity items, and all cash flows must be reported gross. (b) a net cash inflow of $125,000 should be recorded in the financing section because both transactions involve stockholders' equity items, and all cash flows related to a particular activity must be netted against one another. (c) a net cash inflow of $125,000 should be recorded in the investing section because both transactions involve changes in the company's investments, and all cash flows related to a particular activity must be netted against one another. (d) a $180,000 cash inflow should be recorded in the financing section because the stock sale affects stockholders' equity, and a $55,000 cash outflow should be recorded in the investing section because the stock repurchase represents an investment.
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In january of last year, newton inc. sold 15,000 shares of its own common stock for $180,000. ten mo...
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