The following information is available. Calculate the cash flow for operating activities. Net Income 60 Depreciation Expense 5 Decrease in Acct. Rec. 6 Decrease in Acct. Pay. 3 Purchase of Equipment 15 Increase in Supplies 4 The company sold equipment with an original cost of $35 for $30. The accumulated depreciation was $25. The Company issued common stock for $ and retired a bond for $10. What is the net cash flow from operating activities? A. $42 B. $40 C. $44 D. $55 What is the net cash flow from Investing Activities? A. $15 increase B. $15 decrease C. $10 increase D. $20 increase What is the net cash flow from Financing Activities? A. $14 B. $ 5 C. ($14) D. ($ 5) What is the change in the cash account from all activities? A. $40 B. $34 C. $54 D. $41
Expert Answer
Cash Flow from Operating Activities | ||
Net Income | $ 60 | |
Add | Depreciation | $ 5 |
Add | Decrease in Acc Receivable | $ 6 |
Less | Profit on Sale of Equipment ($ 30 – $ 10) | $ (20) |
Less | Decrease in Acc Pay | $ (3) |
Less | Increase in Supplies | $ (4) |
Net Cash Flow (a ) | $ 44 | |
Cash Flow from Investing Activities | ||
Purchase of Equipment | $ (15) | |
Add | Sales of Equipment | $ 30 |
Net Cash Flow (b ) | $ 15 | |
Cash Flow from Financing Activities | ||
Issue of Common Stock | $ 5 | |
Less | Retire of Bond | $ (10) |
Net Cash Flow (c ) | $ (5) | |
Change in Cash Account from All Activities (a + b + c) | $ 54 | |
Ans 1 | $44 | C |
Ans 2 | $ 15 increase | A |
Ans 3 | ($5) | D |
Ans 4 | $54 | C |