Financial, Investing, and Operating Activities

Question

This Information will be used for all questions:

Selected Balance Sheet Information	Year 2020	Year 2021
Cash	40,000	?
Accounts Receivable	10,000	14,000
Prepaid Rent	5,000	6,000
Inventory	35,000	30,000
Accounts Payable	3,000	2,000
Unearned Revenue	5,000	7,000
Income Taxes Payable	14,000	12,000
Other Relevant Information for 2021
Beginning Cash Balance	40,000
Net Income	65,000
Depreciation Expense	40,000
Cash Paid for Dividends	10,000
Cash Received for Loan	40,000
Cash Repaying Loan	10,000
Cash Payment to Purchase Land	12,000
Cash Received for Sale of Equipment	15,000
Gain on Sale of Equipment	5,000
Cash Received for Issuance of Stock	10,000

What are the company's cash flows for financial, investing, and operating activities?

Answer 1

Please see below the completed indirect cash flow statement. For complete workings, please get in touch and I can share the complete excel workbook.

1. Cashflow from operating activities = 94,000
2. Cash flow from investing activities = 3,000
3. Cashflow from financing activities = 30,000

Indirect Method

Statement of Cashflow

Cashflow from Operating Activities

Net Income 65,000

Adjustments

Add: Depreciation 40,000

Less: Gain on sale of equipment (10,000)

Increase in accounts receivable (4,000)

Decrease in inventory 5,000

Increase in prepaid Rent (1,000)

Decrease in accounts payable (1,000)

Increase in unearned revenue 2,000

Decrease in Income taxes Payable (2,000) 29,000

Net cash provided by operating activities 94,000

Cash flows from investing activities

Purchase of Land (12,000)

Sale of equipment 15,000

Net cash flows from investing activities 3,000

Cash flows from Financing activities

Issuance of Stock 10,000

Dividends paid (10,000)

Loan borrowed 40,000

Loan repayment (10,000)

Net Cash flows from Financing activities 30,000

Net increase in cash 127,000

Cash at beginning of 2021 40,000

Cash at the end of 2021 167,000