Question

Based on the following information, how much cash was provided (used) by Operating, Investing, and Financing Activities

Net Income for the year was $545,000, which includes a gain of $10,000 from the sale of equipment that originally cost $100,000 and had a net book value of $25,000.

Cash increased $300,000, Accounts Receivable decreased $25,000, Inventory increased $50,000, Equipment increased $150,000, Accumulated Depreciation decreased $25,000.

Accounts Payable decreased $20,000, Salaries Payable decreased $15,000, Long-Term Notes Payable increased $100,000.

Repaid $250,000 of notes payable and borrowed additional funds by issuing notes.

Contributed Capital did not change, Retained Earnings increased $435,000.

Cash flow help! Thank you!

Answer 1

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Workings	Amount $
Depreciation expense
Original Cost of asset sold	100,000.00
Less: Net book value	25,000.00
Accumulated depreciation should decrease by	75,000.00
Accumulated depreciation actually decreased by	25,000.00
Depreciation expense	50,000.00
Sale value of equipment
Net book value	25,000.00
Add: Gain on sale of equipment	10,000.00
Sale value of equipment	35,000.00
Equipment purchased
Equipment increased	150,000.00
Add: Original Cost of asset sold	100,000.00
Equipment purchased	250,000.00
Borrowings taken
Long-Term Notes Payable increased	100,000.00
Add: Notes Payable paid	250,000.00
Borrowings taken	350,000.00
Dividends paid
Net Income	545,000.00
Less: Retained Earnings increased	435,000.00
Dividends paid	110,000.00

Cashflow statement	Amount $	Amount $
Particulars
Net Income		545,000.00
Adjustment to reconcile Net Income to Net Cash
Add:
Deprecation Expense		50,000.00
Less:
Gain on sale of equipment		10,000.00
Cash flow from Operations		585,000.00
Changes in Current Assets/Current Liabilities
Decrease in Accounts Receivable	25,000.00
Increase in Inventory	(50,000.00)
Decrease in Accounts Payable	(20,000.00)
Decrease in Salaries Payable	(15,000.00)	(60,000.00)
Net cash provided by operating activities		525,000.00
Cash flow from investing activities
Sale value of equipment	35,000.00
Equipment purchased	(250,000.00)
Net cash used by investing activities		(215,000.00)
Cash flow from financing activities
Notes Payable paid	(250,000.00)
Borrowings taken	350,000.00
Dividends paid	(110,000.00)
Net cash used by financing activities		(10,000.00)
Net Increase in cash		300,000.00

Please note that Net Increase in cash is matching with the figure given in this problem.