A company had the following transactions during the year: 1. Paid rent for the n

Question

A company had the following transactions during the year:

1. Paid rent for the next two years, $8,700.

2. Purchased office supplies on account, $3,400.

3. Purchased equipment, paying $10,000 cash and issuing a note payable for $8,000.

4. Borrowed from the bank, $6,300.

5. Paid employee salaries, $8,000.

6. Paid $1,600 on account related to transaction 2 above.

7. Paid dividends to stockholders, $3,500.

8. Sold land for $10,800 that was purchased in a prior year for $7,100.

9. Collected cash from customers for services provided, $25,600.

Calculate cash flows from operating activities, investing activities, and financing activities.

Explanation / Answer

Particulars Amount Cash Flow from Operating Activities Paid Rent 8700 Paid Employee Salaries 8000 Paid to accounts payable 1600 Collected cash from customers 25600 Total Cash flow from operating activities 7300 Cash Flow From Investing activities Sold Land 10800 Purchased Equipment 10000 Total Cash flow from operating activities 800 Cash Flow from financing activities Borrowed From Bank 6300 Paid Dividend to stockholders 3500 Total Cash Flow from financing activities 2800

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