PROBLEMS Statement of cash flows: classifying operating, investing, and financin

Question

PROBLEMS Statement of cash flows: classifying operating, investing, and financing activities of cash flows (LG 2) Sweeney Company began operations on January 1, 2011. The accounting records of Sweeney Company reveal the following transactions for the year ended December 31, 2011: P14-32. a. Cash proceeds received from sale of common stock were $345,000. b. Cash payments to suppliers for merchandise inventory purchases were $195,000 c. Dividends on common stock declared and paid were $50,000 d. Notes payable (long-term) issued for cash during the year were $35,000. e. Interest payments on notes payable amounted to $2,000. f. Cash collections from customers were $235,000. g. Cash proceeds from sale of machine$46,000. h. Salaries paid to employees were $45, i. Purchases of investment securities tctuled $75,000. j. Dividend revenue received totaled $1,000. k. Purchased shares of our own common stock for $30,000. I. Payments for insurance were $6,000. REQUIRED Prepare a statement of cash flows for the year ended December 31, 2011. Use the direct method (format shown in Exhibit 14.5 to determine cash provided by (used in ing activities. ) operat

Explanation / Answer

Cash flow from operation activities

Cash received from customers 235000

Cash Payment to suppliers (195000)

salary payment (45000)

Insurance payment (6000)

Interest payment (2000)

Net cash used by operating activities ($13000)

Cash flow from investing activities

Sale of machine 46000

purchase of Investment (75000)

Net cash used by investing activities ($29000)

Cash flow from financing activities

issue of common stock 345000

Dividend paid (50000)

issue of Notes payable (long term) 35000

Dividend received 1000

Purchase of Treasury stock (30000)

Net cash provided by financing activities $301000

Net increase in cash $259000

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