Question

1. Oering's Furniture Corporation is a Virginia-based manufacturer of furniture. In a recent year, it reported the following activities:

Net income	$	5,155
Purchase of property, plant, and equipment		2,087
Borrowings under line of credit (bank)		1,123
Proceeds from issuance of stock		21
Cash received from customers		37,164
Payments to reduce long-term debt		54
Sale of marketable securities		221
Proceeds from sale of property and equipment		6,877
Dividends paid		292
Interest paid		108
Purchase of treasury stock (stock repurchase)		2,573

Required:

Based on this information, present the investing and financing activities sections of the cash flow statement. (List cash outflows as negative amounts.)

2.

The following information pertains to Peak Heights Company:

Income Statement for Current Year
Sales			$	85,500
Expenses
Cost of goods sold	$	51,775
Depreciation expense		8,000
Salaries expense		11,500		71,275
Net income			$	14,225

Partial Balance Sheet	Current year		Prior year
Accounts receivable	$	11,300	$	15,400
Inventory		13,200		9,700
Salaries payable		1,560		990

Required:

Present the operating activities section of the statement of cash flows for Peak Heights Company using the indirect method. (List cash outflows as negative amounts.)

Answer 1

CASH FLOW FROM INVESTING and FINANCING ACTIVITIES
	Amounts in$
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of property, plant, and equipment	$        (2,087.00)
Proceeds from sale of property and equipment	$          6,877.00
Net cash inflow from Investing activity	$          4,790.00
CASH FLOW FROM FINANCING ACTIVITIES
Borrowings under line of credit (bank)	$          1,123.00
Proceeds from issuance of stock	$                21.00
Payments to reduce long-term debt	$              (54.00)
Dividends paid	$            (292.00)
Interest paid	$            (108.00)
Purchase of treasury stock (stock repurchase)	$        (2,573.00)
Net cash outlow from financing activity	$        (1,883.00)

2.CASH FLOW indirect method
	Amounts in$
CASH FLOW FROM OPERATING ACTIVITIES
Net income	$        14,225.00
Add
Depreciation expense	$          8,000.00
decrease in accounts receivable	$          4,100.00
increase in salary payable	$              570.00
less
increase in inventory	$        (3,500.00)
Net cash outlow from OPERATING activity	$        23,395.00