Question

A comparative balance sheet for Talkington Corporation is presented below.

		December 31
Assets		2017		2016
Cash		$68,000		$22,000
Accounts receivable		82,000		66,000
Inventory		170,000		189,000
Land		71,000		110,000
Equipment		280,000		200,000
Accumulated depreciation–equipment		(74,000)		(42,000)
Total		$597,000		$545,000
Liabilities and Stockholders’ Equity
Accounts payable		$34,000		$47,000
Bonds payable		150,000		200,000
Common stock ($1 par)		164,000		164,000
Retained earnings		249,000		134,000
Total		$597,000		$545,000

Additional information:

1.		Net income for 2017 was $155,000; there were no gains or losses.
2.		Cash dividends of $40,000 were declared and paid.
3.		Bonds payable of $50,000 were retired.

Compute each of the following:

1.		Net cash provided by operating activities		$
2.		Net cash provided (used) by investing activities		$
3.		Net cash provided (used) by financing activities		$

Answer 1

1.	Net Cash provided by Operating activities	$177,000
2.	Net cash provided (used) by Investing activities	($41,000)
3.	Net cash provided (used) by financing activities	($90,000)

Explanation:-

1.

Net income	$155,000
Add: Depreciation Expense ($74,000 - $42,000)	$32,000
Less: Increase in accounts Receivable ($66,000 - $82,000)	($16,000)
Add: Decrease in Inventory ($189,000 - $170,000)	$19,000
Less: Decrease in Account Payable ($47,000 - $34,000)	($13,000)
Net cash provided by operating activities	$177,000

2.

Sale of Land ($110,000 - $71,000)	$39,000
Purchase of Equipment ($200,000 - $280,000)	(80,000)
Net cash used by investing activities	($41,000)

3.

Retirement of bonds	($50,000)
Payment of cash dividends	($40,000)
Net cash used by financing activities	($90,000)