Cash Flow Computations From the following selected data, compute: 1. Net cash fl

Question

Cash Flow Computations

From the following selected data, compute:

1. Net cash flow provided (used) by operatingactivities.

2. Net cash flow provided (used) by investingactivities.

3. Net cash flow provided (used) by financingactivities.

4. Net increase (decrease) in cash during the year.

5. The cash balance at the end of the year

Cash receipts from:

Customers . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . $270,000

Investments by owners . . . . . . . . . . . . . . . . . . .. . . . 54,000

Sale of building . . . . . . . . . . . . . . . . . . . . . .. . . . . . 90,000

Proceeds from bank loan . . . . . . . . . . . . . . . . . .. . . 60,000

Cash payments for:   

Wages . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . $ 82,000

Utilities . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . 3,000

Advertising . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 4,000

Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . 36,000

Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . 67,000

Dividends . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 20,000

Repayment of principal on loan . . . . . . . . . . . . . . .. . 40,000

Purchase of land . . . . . . . . . . . . . . . . . . . . . .. . . . . . 106,000

Cash balance at beginning of year . . . . . . . . . . . . .. . . $386,000

Explanation / Answer

1

Cash flows from OperatingActivities

2

Cash flows from InvestingActivities

3

Cash flow from FinancingActivities

4

5

1

Cash flows from OperatingActivities

Cash receipt from customer 270000 less: Cash payment         Wages 82000         Utiliites 3000         Advertising 4000         Rent 36000 125000 Cash generated from 145000 operating activities less: Taxes 67000 Net Cash inflows fromoperation $78000

2

Cash flows from InvestingActivities

Investment by Owners -54000 Sale of building 90000 Purchase of Land -106000 Net cash flows(used) fromInvesting Activities -$70000

3

Cash flow from FinancingActivities

Proceeds from Bank Loan 60000 Repayment of principal on loan -40000 Dividend paid -20000 No cash Inflow norOutflow from Financing 0 Activities

4

Net Increase in Cash during the year1+2+3 8000 {78000 + (-70000) + 0}

5

Cash balance at beginning of year 386000 Add: Net Increase in cash during the year 8000 Cash balance at the endof theyear                 $394,000

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