Question

1	Using the following information for 2018, calculate the net cash provided by
	Operating Activities.
	Net income	$             110,000
	Depreciation expense	$               60,000
	Decrease in Accts Receivable	$               45,000
	Increase in Inventory	$               35,000
	Decrease in Accts Payable	$               20,000
2	Using the following information for 2018, calculate the net cash provided by
	Investing Activities.
	Purchase of land	$         1,100,000
	Purchase of equipment	$             300,000
	Proceeds from sale of building	$         2,500,000
	Purchase of computers	$               25,000
	Purchase of LT investments	$               75,000

Answer 1

1.

calculation of Net cash flow from operating activities

Operating activities
Net income	110,000
Add : Adjustments to reconcile net income to net cash provided by operating activities
Depreciation expense	60,000
Change in current operating assets and liabilities :
Inventory increase	-35,000
Accounts receivable decrease	45,000
Accounts payable decrease	-20,000
Net cash flow from operating activities	$160,000

Net cash flow from operating activities = $160,000

2.

Calculation of net cash provided by investing activities

Proceeds from sale of building	2,500,000
Purchase of land	-1,100,000
Purchase of equipment	-300,000
Purchase of computer	-25,000
Purchase of LT investment	-75,000
Net cash provided by investing activities	$1,000,000

Net cash provided by investing activities = $1,000,000

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