Question

In: Accounting

Classifying Cash Flows The company provided the following information. (a)   Cash sales for the year were...


Classifying Cash Flows
The company provided the following information.
(a)   Cash sales for the year were $50,000; sales on account totaled $60,000. (b) Cost of goods sold was $55,000. (c)   All inventory is purchased on account. (d) Depreciation on building was $31,000 for the year.
(e)   Depreciation on equipment was $2,000.
(f)   Cash collections of accounts receivable were $38,000.
(g) Cash payments on accounts payable for inventory equaled $39,000.
(h)   Rent expense paid in cash was $11,000.
(i)   20,000 shares of common stock were issued for $240,000 in cash.
(j)   Land valued at $106,000 was acquired in exchange for signing a mortgage note payable.
(k)   Equipment was purchased for cash at a cost of $84,000.
(l)   Dividends of $46,000 were declared but not yet paid.
(m) $15,000 of dividends that had been declared the previous year were paid in cash.
(n)   Interest totaling $16,000 was paid in cash during the year.
(o)   A machine used on the assembly line was sold for $12,000 in cash. The machine had a book value of $7,000.
(p) On January 1, the company entered into an operating lease to secure the use of a building having a cash price of $200,000. The first lease payment of $19,000 in cash was made on January 1.
1.   Compute cash from operating activities. 2.   Compute cash from investing activities. 3.   Compute cash from financing activities

Solutions

Expert Solution

Requirement 1:

Cash Flow from Operating activities:

Particulars

Amount

Operating Activities

Cash Sales

50000

Cash Received from customers

38000

Total Receipts in cash

88000

Less: Disbursements for

Rent

11000

Operating Lease rental

19000

Cost of Merchandise purchased

39000

Total Payment in cash

69000

Cash flow from Operating Activities

19000

Requirement 2:

Cash Flow from investing activities:

Cash from investing activities

Purchase of Equipment

-84000

Sale of Machinery

12000

Cash from Investing Activities

-72000

Requirement 3:

Cash Flow from Financing Activities:

Cash from financing Activities

Issue of Common Stock

240000

Less: Dividend paid

         Interest paid

-15000

-16000

Cash from financing activities

209000


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