Question

The balance sheet data of Pronghorn Company at the end of 2020 and 2019 are shown below.

		2020			2019
Cash		$29,800			$35,200
Accounts receivable (net)		55,300			45,200
Inventory		65,200			45,500
Prepaid expenses		15,000			25,200
Equipment		89,900			74,600
Accumulated depreciation—equipment		(17,980	)		(7,900	)
Land		70,600			40,300
		$307,820			$258,100
Accounts payable		$65,500			$52,100
Accrued expenses		15,000			17,900
Notes payable—bank, long-term		–0–			23,100
Bonds payable		30,300			–0–
Common stock, $10 par		188,000			157,700
Retained earnings		9,020			7,300
		$307,820			$258,100

Land was acquired for $30,300 in exchange for common stock, par $30,300, during the year; all equipment purchased was for cash. Equipment costing $13,100 was sold for $3,000; book value of the equipment was $6,100. Cash dividends of $10,000 were declared and paid during the year.

Compute net cash provided (used) by: (Show amounts that decrease cash flow with either a - sign e.g. -12,000 or in parenthesis e.g. (12,000).)

(a)		Net Cash                                                           providedused by operating activities.		$
(b)		Net Cash                                                           providedused by investing activities.		$
(c)		Net Cash                                                           providedused by financing activities.		$

Answer 1

Answer- a)- Net cash provided by operating activities = $22800.

b)- Net cash (used) by investing activities = $(25400).

c)- Net cash (used) by financing activities = $(2800).

Explanation-

PRONGHORN COMPANY
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED 31 DECEMBER,2020
Particulars		Amount
		$
Cash flow from operating activities
Net Income	($9020+$10000-$7300)	11720
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation		17080
Loss on sale of equipment	($6100 -$3000)	3100
Change in operating assets & liabilities
Increase in accounts receivable		-10100
Incresae in inventory		-19700
Decrease in prepaid expenses		10200
Decrease in accrued expenses		-2900
Increase in accounts payable		13400
Net cash flow from operating activities (a)		22800
Cash Flow from Investing activities
New equipment purchased		-28400
Old equipment sold		3000
Net cash Flow (used) by Investing activities (b)		-25400
Cash Flow from Financing activities
Cash dividends paid		-10000
Notes payable paid		-23100
Bonds payable issued		30300
Net cash Flow (used) by Financing activities (c)		-2800
Net Change in cash c=a+b+c		-5400
Beginning cash balance		35200
Closing cash balance		29800