Question

The following is cash flow data for Rocket Transport:

Cash dividend	$	98,000
Purchase of bus	$	18,000
Interest paid on debt	$	25,000
Sales of old equipment	$	45,000
Repurchase of stock	$	127,000
Cash payments to suppliers	$	125,000
Cash collections from customers	$	480,000

a.	Find the net cash provided by or used in investing activities. (Input the amount as positive value. Omit the "$" sign in your response.)

Net cash (Used in or provided by?)   used in  provided by  investing activities

$ ?

b.	Find the net cash provided by or used in financing activities.

Net cash  (Used in or provided by?)  used in  provided by  financing activities

$?

c.	Find the net increase or decrease in cash for the year.

Net  (Used in or provided by?)  decrease  increase  in cash

$ ?

Answer 1

Solution :

a.Calculation of net cash provided by or used in investing activities :

As per the information given in the question the investing activities were :

Purchase of bus = $ 18,000 ; ( Cash outflow)

Sales of old equipment = $ 45,000 ( Cash inflow)

Thus the net cash provided by investing activities is

= - $ 18,000 + $ 45,000

= $ 27,000

Thus the net cash provided in investing activities = $ 27,000

b.Calculation of net cash provided by or used in financing activities :

As per the information given in the question the financing activities were :

Cash dividend = $ 98,000   ( Cash outflow )

Interest paid on debt = $ 25,000   ( Cash outflow )

Repurchase of stock = $ 127,000   ( Cash outflow )

Thus the net cash used in financing activities is

= - $ 98,000 - $ 25,000 - $ 127,000

= - $ 250,000

Thus the net cash used in financing activities = - $ 250,000

c. Calculation of net increase or decrease in cash for the year

The net increase or decrease in cash for the year is

= net cash provided by or used in operating activities + net cash provided by or used in investing activities + net cash provided by or used in financing activities.

As per the information given in the question the operating activities were :

Cash payments to suppliers = $ 125,000               ( Cash outflow )

Cash collections from customers = $ 480,000        ( Cash Inflow )

Thus the net cash provided by or used in operating activities is

= $ 480,000 - $ 125,000

= $ 355,000

The net cash provided in operating activities is = $ 355,000

Thus the net increase or decrease in cash for the year is

= net cash provided by operating activities + net cash provided by investing activities + net cash used in financing activities.

= $ 355,000 + $ 27,000 - $ 250,000

= $ 132,000

The net increase in cash for the year = $ 132,000