Question

Burns Corporation's net income last year was $93,700. Changes in the company's balance sheet accounts for the year appear below: Increases (Decreases) Asset and Contra-Asset Accounts: Cash and cash equivalents Accounts receivable Inventory Prepaid expenses Long-term investments Property, plant, and equipment Accumulated depreciation Liability and Equity Accounts: Accounts payable Accrued liabilities Income taxes payable Bonds payable Common stock Retained earnings $ 18,100 $ 13,800 $(16,800) $ 4,200 $ 11,000 $ 72,100 $ 33,200 $(19,400) $ 17,000 $ 4,300 $(65,400) $ 43,200 $ 89,500 The company did not dispose of any property, plant, and equipment, sell any long-term investments, issue any bonds payable, or repurchase any of its own common stock during the year. The company declared and paid a cash dividend of $4,200. Required: a Prenare the oneratinn activities sertion of the company's statement of cash flows for the vear (Use the indirect method Prey 4 of 5 Next >

can you please show me how to arrive at the correct answer. thanks so much

Answer 1

A)

Operating activities:
Net income		$93700
Adjustments:
Increase in accounts receivable	(13800)
Decrease in inventory	16800
Increase in prepaid expenses	(4200)
Decrease in accounts payable	(19400)
Increase in accrued liabilities	17000
Increase in income tax payable	4300
Accumulated depreciation	33200	33900
Net cash provided by operating activities		$127600

Increase in current assets indicates the assets of the company is increased by which the cash of the company will decreases in the same way decrease in current assets indicates that the company must sold its assets by which the cash will increase.

Decrease in current liabilities indicates that company paid off its current assets by which the cash of the company will decreases and increase in current liabilities indicates cash inflow.

B)

Investing activities:
Purchase of long term investments	(11000)
Purchase of property, plant and equipment	(72100)
Net cash used in investing activities	$-83100

As in the question long term investments is increasing and the long term investments can only increased when they are purchased and as they are purchased the cash of the company will decreases.

In the same way Property, plant and equipment are increasing which can only be possible when are purchased and as they are purchased the cash of the company will decreases.

C)

Financing activities:
Repaying principal of bonds payable	(65400)
Issuance of common stock	43200
Paying a dividend	(4200)
Net cash used in financing activities	$-26400

As the bonds payable are decreasing that means the company must have paid bonds payable by which the cash of the company will decreases.

Common stock is increasing and it is given in the question that the company did not repurchase any of its common stock that means the company must have issued common stock by which cash of the company will increases.

Company has declared and paid a cash dividend by which cash of the company will decrease.

NOTE:- Hope you understand. For any query please ask in the comment section and please rating.