In: Accounting
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
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 |