3Cash 4 Accounts receivable (net) 5 Merchandise inventory 6 Prepaid expenses 7 E

Question

3Cash 4 Accounts receivable (net) 5 Merchandise inventory 6 Prepaid expenses 7 Equipment 8 Accumulated depreciation-equipment 9Total assets $180,220.00 241,070.00 299,210.00 9,890.00 536,180.00 (131,210.00) $1,190,230.00 $1,135,360.00 $147,270.00 224,490.00 321,930.00 13,120.00 655,170.00 (171,750.00) 10 Liabilities and Stockholders'Equity 11 Accounts payable (merchandise creditors) 12 Mortgage note payable 13 Common stock, $10 par 14 Paid-in capital:Excess of issue price over par-common stock 15 Retained earnings 16 Total liabilities and stockholders'equity $237500.00 336,240.00 23,000.00 310,000.00 228,620.00 $1,190,230.00 $1,135,360.00 $249,380.00 0.00 73,000.00 460,000.00 407850.00

Explanation / Answer

Particulars Amount CASH FLOW FROM OPERATING ACTIVITIES Net Income as per income statement (407850-228620)     179,230.00 Add: Depreciation (171750-131210)        40,540.00 Net Profit before working capital changes     219,770.00 Add: Decrease in Account receivable        16,580.00 Less: Increase in inventory        22,720.00 Less: Increase in prepaid expenses          3,230.00 Add: Increase in account payable        11,880.00 CASH FLOW FROM OPERATING ACTIVITIES (A)     222,280.00 CASH FLOW FROM INVESTING ACTIVITIES Purchase of equipment (118,990.00) CASH FLOW FROM INVESTING ACTIVITIES (B) (118,990.00) CASH FLOW FROM FINANCING ACTIVITIES Payment of note payable (336,240.00) Stock Issued (73000- 23000) + (460000-310000)     200,000.00 CASH FLOW FROM FINANCING ACTIVITIES (C ) (136,240.00) CASH GENERATED FROM ALL ACTIVITES (A+ B+ C)     (32,950.00) Opening cash and cash equivalents     180,220.00 Closing cash and cash equivalents     147,270.00

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