Question

1. Consider the information for Hafner Company (below) and provide an amount for the cash flow statement.  Algebra may be required to find the appropriate amounts.  Indicate if amounts are positive or negative cash flows.  Each amount is worth 2 points.

Cash flow from Operating Activities

Cash flow from Investing Activities

Cash flow from Financing Activities

Cash flow from debt repayments

The balance sheets for Hafner Company showed the following information. Additional information concerning transactions and events during 2019 are presented below.

Hafner Company

Balance Sheet

This Year            Last Year

2019                   2018

Cash                                                                                             $  35,900           $  10,200

Accounts receivable (net)                                                                30,300               20,300

Inventory                                                                                           45,000               42,000

Long-term investments                                                                              0               15,000

Property, plant & equipment                                                          198,500             150,000

Accumulated depreciation                                                               (37,700)           (25,000)

$272,000           $212,500

Accounts payable                                                                         $  18,000           $  26,500

Accrued liabilities                                                                             23,000               17,000

Long-term notes payable                                                                 70,000               50,000

Common stock                                                                                 90,000               90,000

Retained earnings                                                                            71,000               29,000

$272,000           $212,500

Additional data:

1.   Net income for the year 2019, $82,000.

2.   Depreciation on plant assets for the year, $12,700.

3.   Sold the long-term investments for $26,000.

4.   Purchased machinery costing $48,500, paid cash.

5.   Took out a long-term note payable for $50,000

Answer 1

Answer- Cash flow from Operating Activities = $68200.

Cash flow from Investing Activities = $-22500

Cash flow from Financing Activities = $-20000

Cash flow from debt repayments = $20000

Explanation-

HAFNER COMPANY
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED 31 DECEMBER,2019
Particulars		Amount
		$
Cash flow from operating activities
Net Income		82000
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation		12700
Gain on sale of investment		-11000
Change in operating assets & liabilities
Increase in accounts receivable		-10000
Increase in inventory		-3000
Decrease in accounts payable		-8500
Increase in accrued liabilities		6000
Net cash flow from operating activities (a)		68200
Cash Flow from Investing activities
New equipment purchased		-48500
Long-term investments sold		26000
Net cash Flow from Investing activities (b)		-22500
Cash Flow from Financing activities
Cash dividends paid	($29000+$82000-$71000)	-40000
Long-term loans taken		50000
Long-term loans paid		-30000
Net cash Flow from Financing activities (c)		-20000
Net Change in cash c=a+b+c		25700
Beginning cash balance		10200
Closing cash balance		35900