Investing and Financing Cash Flows
The following information was obtained from Melville Company's comparative balance sheet.
End of Year |
Beginning of Year |
|
---|---|---|
Cash | $19,000 | $9,000 |
Accounts receivable | 50,000 | 35,000 |
Inventory | 55,000 | 49,000 |
Prepaid rent | 6,000 | 8,000 |
Long-term investments | 21,000 | 32,000 |
Plant assets | 140,000 | 106,000 |
Accumulated depreciation | (42,000) | (32,000) |
Accounts payable | 24,000 | 22,000 |
Income tax payable | 4,000 | 6,000 |
Common stock | 127,000 | 92,000 |
Retained earnings | 106,000 | 91,000 |
Capital expenditures | 15,200 |
Assume that Melville Company’s income statement showed depreciation expense of $10,000, a gain on sale of investments of $7,000, and a net income of $60,000.
During the year, Melville Company purchased plant assets for cash, sold investments for cash (the entire $7,000 gain developed during the year), and issued common stock for cash. The firm also declared and paid cash dividends.
What items and amounts will appear in (a) the cash flow from investing activities and (b) the cash flow from financing activities sections of a statement of cash flows?
Use a negative sign with cash outflow answers.
a.
Cash flow from investing activities will show | |
Purchase of plant assets | Answer |
Sale of investments | Answer |
b.
Cash flow from financing activities will show | |
Issuance of common stock | Answer |
Payment of dividends |
CASH FLOW FROM INVESTMENT ACTIVITY
PARTICULARS | AMOUNT($) |
sale of the long term investment(11000+7000) | 18000 |
purchase of plant asset(140000-106000) | (34000) |
Net outflow made in investment activity | (16000) |
CASH FLOW FROM FINANCING ACTIVITY
PARTICULARS | AMOUNT($) |
Issuance of common stock(127000-92000) | 35000 |
Payment of cash dividend9106000-91000-60000) | (45000) |
Net outflow from financing activity | (10000) |
Investing and Financing Cash Flows The following information was obtained from Melville Company's comparative balance sheet....
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