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Using the following information to answer questions (short answer) Below are the 2017 and 2018 year-end...

Using the following information to answer questions (short answer)

Below are the 2017 and 2018 year-end balance sheets for firm AAA:

Assets:                                                                      2018                                        2017      

Cash                                                                           --------                                   158,000

Accounts receivable                                                   864,000                                   700,000

Inventories                                                             2,000,000                               1,400,000

Total current assets                                             $3,064,000                              $2,270,000

Net fixed assets                                                      6,000,000                               5,600,000

Total assets                                                                 ---------                                  -----------

Liabilities and equity:

Accounts payable                                                  $1,400,000                              $1,090,000

Notes payable                                                        1,600,000                               1,800,000

Total current liabilities                                       $3,000,000                              $2,890,000

Long-term debt                                                      2,400,000                               2,400,000

Common stock                                                       3,000,000                               2,000,000

Retained earnings                                                      664,000                                   580,000

Total common equity                                          $3,664,000                              $2,580,000

Total liabilities and equity                                     -------------                             ---------------

Assume sales in 2017 and 2018 were the same. 200,000 = depreciation. 500,000 = net income. No dividend paid.

1. Calculate net cash flow from operation.

2. Calculate net cash flow from investment.

3. Calculate net cash flow from financing.

4. Calculate net changes in cash

Solutions

Expert Solution

Answer 1
Net Cash flow from Operations
Net Income $500,000.00
Depreciation $200,000.00
Increase in Accounts Receivable -$164,000.00
Increase in Inventories -$600,000.00
Increase in Accounts Payable $310,000.00
Net Cash flow from Operations $246,000.00
Answer 2
Net Cash flow from Investment
Net Fixed assets as of 2017 $5,600,000.00
Less : Net fixed assets as of 2018 $6,000,000.00
Less : Depreciation $200,000.00
Net Cash flow from Investment -$600,000.00
Answer 3
Net Cash flow from Financing
Decrease in Notes Payable -$200,000.00
Issue of Common Stock $584,000.00
Net Cash flow from Financing $384,000.00
Answer 4
Net changes in Cash
Net Cash flow from Operations $246,000.00
Net Cash flow from Investment -$600,000.00
Net Cash flow from Financing $384,000.00
Net changes in Cash $30,000.00
Working
Calculation of stock dividend paid
Retained earnings as of 2017 $580,000.00
Add : Net Income for 2018 $500,000.00
Less : Retained Earnings as of 2018 $664,000.00
Stock dividend paid $416,000.00
Calculation of Issue of common stock for cash
Total issue of Common stock $1,000,000.00
Less : Stock dividend paid $416,000.00
Issue of Common stock for cash $584,000.00

jeff jeffy answered 1 year ago
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