Question

Use the following to answer questions 16-20 Following are the transaction of TAR Inc., which provides consulting services related to mining of precious metals Transaction Amount of Transaction Cash used for payment of employee salaries Cash provided from sale of equipment that had been used in operations Cash used for purchase of office supplies Cash used for purchase of office equipment Cash used to pay office utilities Cash used for payment of office rent $345.000 125,000 2,000 300,000 6,000 12,000 550,000 250,000 75,000 50,000 H Cash provided from consulting customers Cash provided from long-term borrowing Cash used to pay the bank for a loan due this month Purchase of company vehicle paying 4/10 cash and borrowing the rest 16. $. Refer to transaction), how much should be included in cash used from investing activities? 17. $ Determine the net cash flows from operating activities include "if needed) Determine the net cash flows from investing activities (include if needed) Determine the net cash flows from financing activities include " if needed) How much did cash change over the year?

Answer 1

Answer-

16)

Only the 4/10 of cash paid for purchase of company vehicle should be included in cash used from investing activities because the remaining balance of 6/10 will come under cash used from Financing Activities because remaining balance is from borrowings. Therefore, cash used from investing activities for purchase of company vehicle is $20,000 ($50,000*4/10).

17)

	Cash flows from Operating Activities:
A	Cash used for payment of employees salaries	($345,000)
C	Cash used for purchase of office supplies	($2,000)
E	Cash used to pay office utilities	($6,000)
F	Cash used for payment of office rent	($12,000)
G	Cash provided from consulting customers	$550,000
	Net Cash flows from Operating Activities	$185,000

Therefore, net cash flows from Operating Activities is $185,000.

18)

	Cash flows from Investing Activities:
B	Cash provided from sale of equipment that had been used in operations	$125,000
D	Cash used for purchase of office equipment	($300,000)
J	Purchase of company vehicle ($50,000*4/10	($20,000)
	Net Cash flows from Investing Activities	($195,000)

Therefore, net cash flows from Investing Activities is -$195,000.

19)

	Cash flows from Financing Activities:
H	Cash provided from long-term borrowing	$250,000
I	Cash used to pay the bank for a loan due this month	($75,000)
J	Purchase of company vehicle ($50,000*6/10	($30,000)
	Net Cash flows from Financing Activities	$145,000

Therefore, net cash flows from Financing Activities is $145,000.

20)

Net Cash flows from Operating Activities	$185,000
Net Cash flows from Investing Activities	($195,000)
Net Cash flows from Financing Activities	$145,000
Net cash change (Increase / Decrease)	$135,000

Therefore, net cash change over for the year is $135,000.