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In: Accounting
The following information is for Redwood Inc. for the year ended December 31, 2016. Redwood had...
The following information is for Redwood Inc. for the year ended December 31, 2016. Redwood had a cash and cash equivalents balance of $5,700 on January 1, 2016. Cash Received from: Customers $ 1,950 Interest on investments 225 Sale of land 125 Sale of common stock 650 Issuance of debt securities 2,050 Cash Paid for: Interest on debt 325 Income tax 85 Debt principal reduction 1,550 Purchase of equipment 4,600 Purchase of inventory 1,000 Dividends on common stock 225 Operating expenses 525
Required: Prepare a statement of cash flows for the year using the direct method for operating activities. (Amounts to be deducted should be indicated with a minus sign.)
Cash Received from:
Customers$1,950
Interest on investments 225
Sale of land 125
Sale of common stock 650
Issuance of debt securities 2,050
Cash Paid for:
Interest on debt 325
Income tax 85
Debt principal reduction 1,550
Purchase of equipment 4,600
Purchase of inventory 1,000
Dividends on common stock 225
Operating expenses 525
Solutions
Expert Solution
Required: Prepare a statement of cash flows for the year using the direct method for operating activities. (Amounts to be deducted should be indicated with a minus sign.)
| Cash flow from operating activities | ||
| Cash inflow | ||
| Cash received from customer | 1950 | |
| Total Cash inflow | 1950 | |
| Cash outflow | ||
| Cash paid for purchase of inventory | 1000 | |
| Operating expense | 525 | |
| Interest on debt | 325 | |
| Income tax | 85 | |
| Total Cash outflow | 1935 | |
| Net cash flow from operating activities | 15 | |
| Cash flow from investing activities | ||
| Sale of land | 125 | |
| Purchase of equipment | -4600 | |
| Interest on investment | 225 | |
| Net cash flow from investing activities | -4250 | |
| Cash flow from financing activities | ||
| Sale of common Stock | 650 | |
| Issue debt | 2050 | |
| Debt reduction | -1550 | |
| Dividend | -225 | |
| Net cash flow from financing activities | 925 | |
| Net cash flow | -3310 | |
| Beginning Cash | 5700 | |
| Ending Cash | 2390 | |
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