Question

1). C Corp takes out a short-term loan of $12,000 on January 1st from Bank B. By December 31st, C Corp has completed payments totalling $12,960 to Bank B. How much does C Corp record in net operating cash flows related to this loan?

2.)

1. Which of the following would constitute an operating cash flow? (select all that apply)

   1. Company B signs a contract to deliver $50,000 of natural gas to Company C every month beginning next year.

   2. Company D pays $2 million for the annual rent on its warehouse space it has already occupied for two months.

   3. Company C buys $20,000 of raw materials and pays up front in cash netting a 10% discount.

   4. Company A sells $10,000 of inventory to a customer that promises to pay cash within 30 days.

3).

1. Which of the following transactions would be classified as an investing cash flow activity? (select all that apply)

   1. You pay your marketing director $12,000 for services rendered

   2. You pay your shareholders $600,000 of dividends

   3. You purchase inventory for $11,000 that you plan to rent out for the next 8 years

   4. You buy a plot of land for $3,200,000

Answer 1

1. NET OPERATING CASH FLOW - PAYMENT OF SHORT TERM LOAN ($12,960)

2. OPERATING CASH FLOWS

B. Company D pays $2 million for the annual rent on its warehouse space it has already occupied for two months.

C. Company C buys $20,000 of raw materials and pays up front in cash netting a 10% discount.

D. Company A sells $10,000 of inventory to a customer that promises to pay cash within 30 days.

SIGNING OF A CONTRACT IS NOT ANOPERATING CASH FLOWS.

3. INVESTING CASH FLOW

D. YOU BUY A PLOT OF LAND FOR $3,200,000

PAYMENT FOR SERVICES AND PURCHASE OF INVENTORY ARE OPERATING CASH FLOW AND DIVIDEND PAYMENT IS PART OF FINANCING ACTIVITY,