Question

Exercise 23-16 Your answer is partially correct. Try again. The balance sheet data of Brown Company at the end of 2014 and 2013 are shown below. 2014 Cash Accounts receivable (net) Inventory Prepaid expenses Equipment Accumulated depreciation equipment Land $30,000 55,400 64,400 15,000 89,100 (17,820 ) 69,500 $305,580 2013 $35,100 44,500 45,400 25,200 75,600 (7,900 ) 39,700 $257,600 $64,800 15,100 . -- Accounts payable Accrued expenses Notes payable-bank, long-term Bonds payable Common stock, $10 par Retained earnings 29,800 189,600 6,280 $305,580 $51,500 17,800 23,200 -D- 159,800 5,300 $257.600 Land was acquired for $29,800 in exchange for common stock, par $29,800, during the year; all equipment purchased was for cash. Equipment costing $12,800 was sold for $3,000; book value of the equipment was $6,100. Cash dividends of $9,900 were declared and paid during the year. Compute the following: (Show amounts that decrease cash flow with either a - sign e.g. -14,000 or in parenthesis e.g. (14,000).) (a) Net Cash provided by Operating activities. sal (b) Net Cash Tused by Investing activities. su (c) Net Cash Tused by Financing activities. $ Click if you would like to Show Work for this question: Open Show Work

Answer 1

Compute the following: (a) Net Cash Provided by Operating Activities (b) Net Cash Used by Investing Activities (c) Net Cash Used by Financing Activities 21,500 -23,300 -3,300 Explanation:

$10,880 Brown Company Statement of Cash Flows For the Year Ended December 31, 2014 Cash Flows from Operating Activities Net Income Adjustments to reconcile net income to net Cash Provided by Operating Activities Depreciation Expense $16,620 Loss on Sale of Equipment 3,100 Increase in Accounts Receivables (10,900) Increase in Inventory (19,000) Decrease in Prepaid Expenses 10,200 Increase in Accounts Payable 13,300 Decrease in Accrued Expenses (2,700) Net Cash Provided by Operating Activities Cash Flows from Investing Activities Purchase of Equipment (26,300) Sale of Equipment 3,000 Net Cash Used by Investing Activities Cash Flows from Financing Activities Issuance of Bonds Payable 29,800 Payment of Cash Dividends (9,900) Payment of Notes Payable (23,200) 10,620 21,500 (23,300)

Net Cash Used by Financing Activities Net Decrease in Cash Cash at Beginning of Period Cash at End of Period (3,300) (5,100) 35,100 $30,000 Ending Retained Earnings = Beginning Retained Earnings + Net Income - Dividends Net Income = Ending Retained Earnings + Dividends - Beginning Retained Earnings Net Income = ($6,280 + $9,900 - $5,300) Net Income = $10,880 Original cost Less: Accumulated depreciation ($12,800 - $6,100) Book value Sales proceed Loss on disposal $12,800 6,700 $6,100 3,000 $3,100 Depreciation Expense ($17,820 + $6,700 - $7,900) = $16,620 Purchase of Equipment ($89,100 + $12,800 - $75,600) = $26,300