Question

In order to prepare the Statement of Cash Flows for Egnab Corporation for 2019, the accountant has compiled the following data regarding cash flows:

Cash paid to acquiremarketablesecurities....................... $380,000

Proceeds from sale ofmarketablesecurities....................... $17,500

Proceeds from issuance ofcapitalstock............................. $250,000

Proceeds from issuance ofbondspayable........................... $55,000

Payments to settleshort-termdebt......................................... $32,500

Interest anddividendsreceived............................................... $10,000

Dividendspaid............................................................................ $130,000

Cash paid to suppliersandemployees............................. $1,030,000

Interestpaid.................................................................................. $25,000

Incometaxespaid........................................................................ $70,000

Cash and cash equivalents, January1,2019........................ $43,000

Cash and cash equivalents, December31,2019.................. $63,000

Using the above information, classifythe transactions and then answer the following questions in the space provided.

1. Egnab’s Cash Flow from investing activities during 2019 is:
2. Egnab’s Cash Flow from financing activities during 2019 is
3. Egnab’s Cash Flow from operating activities during 2019 is:
4. In the2 019 statement of Cash Flows for Egnab Corporation,the amount of cash received from customers is:

Answer 1

Answer: (All amount in dollars)

Egnab Corporation

Year Ended 2019

a. Statement of cash flow from investing activities

Paticulars	Amount
Proceeds from sale of marketable securities	17500
Interest and dividend received	10000
Cash paid for acquire marketable securities	(380000)
Net cash outflow from investinmg activities	(352500)

b. Statement of cash flow from financing activities

Paticulars	Amount
Proceeds from issuance of capital sock	250000
Proceeds from issuance of bond payable	55000
Payment to short term debt	(32500)
Dividend paid	(130000)
Interest paid	(25000)
Net cash inflow from financing activities	117500

c. Statement of cash flow from operating activities

Paticulars	Amount
Cash received from Customers (W.N. 3)	1355000
Cash paid to suppliers & employees	(1030000)
Cash flow from operation	325000
Less: Income taxes paid	(70000)
Net cash inflow from operating activities	255000

d. In 2019, Cash received from Customers is = 1355000 (W.N. 3)

working Note:

1. Calculation of cash flow from operating activities:

Closing cash & cash equivalent, December 2019	= Cash flow from Operating activities (+) Cash flow from Investing activities (+) Cash flow from Financing activities (+) Opening cash & cash equivalent, January 2019
63000	= Cash flow from Operating activities (+) (352500) (+) 117500 (+) 43000
Cash flow from Operating activities	= 63000 + 352500 - 117500 - 43000
Cash flow from Operating activities	= 255000

2. Cash flow from operation = Net cash flow from Operating activities (+) Income taxes paid

Cash flow from operation = 255000 + 70000

Cash flow from operation = 325000

3. Cash received from customers = Cash flow from operation + Cash paid to suppliers & employees

Cash received from customers = 325000 + 1030000

Cash received from customers = 1355000