Prepare a Statement of cash flow using the DIRECT method. Not all information listed may be...

Prepare a Statement of cash flow using the DIRECT method.

Not all information listed may be used in solving this problem

Collect ted			$500,000
paid suppliers			$10,000
Increased in Market Securities			$11,000
paid mortgage principal			$13,000
Paid employees			$65,000
Sold fixed assets			$32,000
Transferred to parent			$18,000
Insurance payments			$17,000
Purchased new equipment			$55,000
Additional long term debt			$2,500
Interest payments			$7,000
Unrestricted contributions			$60,000

Expert Solution

Answer : Enclosed is the cash Flow using Direct Method

Statement Of Cash Flow (Using Direct Method)
Particulars	Amount (All in $)
A. Cash Flow fron Operating Activities
Collection from TED	500000
Amount paid to Supplier	-10000
Amount paid to Employees	-65000
Insurance payment	-17000
Total Cash flow from Operating Activities	408000




B . Cash Flow from Investing Acitivities
Amount received on sale of Fixed Assets	32000
Purchased of New Equipment	-55000
Total Cash Flow from Investing Acitivities	-23000


C. Cash Flow from Financing Activities

Paid Mortgage principal	-13000
Amount transferred to Parent	-18000
Amount received from additional Long term Debt	2500
Interest Paid	-7000
Unrestricted contributions	60000
Total Cash Flow from Financing Activities	24500

Net Cash flow from Operating Activities (A+B+C)	409500

Note : It is to be noted Increased in Market Securities is considered value enhancement in existing Market securities lying with company . The said item is a non-cash item untill it is sold and cash is received against it

ekkarill92 answered 1 year ago

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