Question

The comparative balance sheet of Canace Products Inc. for December 31, 20Y6 and 20Y5, is as follows: SHOW ME HO EXCEL TEMPLE GENERAL LED Dec. 31, 2016 Dec. 31, 2045 + Assets Cash Accounts receivable (net). Inventories Investments Land Equipment... Accumulated depreciation. Total assets Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) Accrued expenses payable (operating expenses) Dividends payable. $ 643,400 566,800 1,011,000 0 520,000 880,000 (244,400) $3,376,800 $ 679,400 547,400 982,800 240,000 0 680,000 (200,400) $2,929,200 $ 771,800 63,400 8,800 $ 748,400 70,800 6,400

Answer 1

Cash flow from operating Activities
It determine the amount of cash generated due the normal routine activities of the business
There are two methods from calculating the cash flow from operating activities
a) Direct Method
b) Indirect Method
In this question,we are require to calculate the cash flow from operating activities by direct method
Particulars	Amount
Cash received from customer (Refer working 1)	5,960,600
Cash payments related to purchase of material (refer working 2)	(2,456,800)
Cash payments related to operting expense (refer working 3)	(3,107,400)
Cash paid for income taxes (given in question itself)	(102,800)
Net Cash flow from operating activities		293,600
Cash flow from investing activities
Cash from sale of investment (given in additional data)	176,000
Less: Amount paid for purchase of land	(520,000)
Less: Amount paid for purchase of equipment (880000-680000)	(200,000)
Net Cash flow used for investing activities		(544,000)
Cash flow from financing activities
Issue of common stock (56000-32000)+(408000-192000)	240,000
Dividend paid (refer working 4)	(25,600)
Net Cash flow from financing activities		214,400
Net increase/(decrease) in cash		(36,000)
Cash at the beginning of the year		679,400
Cash at the closing of the year		643,400

Working
1	Cash received from customers	Amount
	Opening receivables	547,400
	Add : Sales	5,980,000
	Less : Closing Receivable	(566,800)
	Cash received from customer	5,960,600
2	Cash payments related to purchase of material	Amount
	Cost of goods sold	2,452,000
	Add : Increase in inventory	28,200
	Less : Increase in Accounts Payable	(23,400)
	Cash paid for material	2,456,800
3	Cash payments related to operting expense	Amount
	Total operating expense	3,144,000
	Less : Depreciation as it is non cash item	(44,000)
	Operating expense other than depreciation	3,100,000
	Add : Decrease in accrued payable	7,400
	Cash payments related to operting expense	3,107,400
4	Dividend declared	28,000
	Add : Opening dividend payable	6,400
	Less : Closing Dividend payable	(8,800)
	Dividend paid	25,600