Question

In preparation for developing its statement of cash flows for the year ended December 31, 2018, Millennlum Solutions, Inc. collected the following Information: ($ in millions) Payment for the early extinguishments of long-term notes (book value: $50.0 million) $ 54.0 192.0 Sale of common shares 126.0 Retirement of common shares Loss on sale of equipment Proceeds from sale of equipment Issuance of short-term note payable for cash Acquisition of building for cash Purchase of marketable securities (not a cash equivalent) Purchase of marketable securities (considered a cash equivalent) Cash payment for 3-year insurance policy Collection of note receivable with interest (principal amount, $15) 2.4 9.6 14.0 9.0 9.0 5.0 7.0 17.0 40.0 Declaration of cash dividends 37.0 Distribution of cash dividends declared in 2017 Required: 1. In Millennlum's statement of cash flows, what were net cash Inflows (or outflows) from Investing activitles for 2018? 2. In MIllennlum's statement of cash flows, what were net cash inflows (or outflows) from financing activitles for 2018?

Answer 1

cash flow statement is prepared to determine changes in cash during the year.

it is bifurcated in three categories (1) cash flow from operating activities (2) cash flow from financing activities (3) cash flow investing activites

cash flow from investing activities add money from sale of assets, stocks bonds , loans and deduct cash payment for loans, stock,assets.

cash flow from Investing activities
proceeds from sale of equipment	$9.6
acquisition of building	($9.0)
purchase of marketable securities (Not cash equivalent)	($9.0)
collection of note receivables (Principle amount)	$15
Net cash flow from investing activities	$6.6
[9.6-9-9+15]

cash flow from financing activities shows the net cash flow that funds the company.it shows the transactions that involves changes in debt equity dividends and interest.

cash flow from financing activities
payment for early extinguishments of long term notes	($54.0)
sale of common shares	$192.0
retirement of common shares	($126.0)
issuance of short term note payable for cash	$14
distribution of cash dividend declared in 2017	($37)
cash flow from financing activities	($11)

**loss on sales of equipment will be added back to net income under cashflow from operating activities

purchase of marketable securities (cash equivalent) will result in increase in cash

declaration of dividend does not result in cash outflow.

interest portion of notes receivable will affect cash flow from operating activities.(Net income)

Answer 2