Question

1. Hilton Company reported net income of $50,000 for the year. During the year, accounts receivable decreased by $15,000, accounts payable decreased by $2,000 and depreciation expense for the year of $9,000 was recorded.

Net cash provided by operating activities for the year is:

2.  Land costing $75,000 was sold for $115,000 cash. The gain on the sale was reported on the income statement as other income.

In addition, a building worth $400,000 was acquired by borrowing the money on a mortgage.

On the statement of cash flows, what is the total amount that should be reported as cash flows from investing activities?

3.  Weaver Company purchased treasury stock with a cost of $20,000 during 2010. During the year, the company paid dividends of $6,000 and issued bonds payable for proceeds of $500,000. What is the net Cash inflow OR outflow from financing activities for 2010 total:

Answer 1

1.

Cash flow from Operating activities
Net income	50,000
Add: Adjustments to reconcile net income to net cash provided by operating activities
Depreciation expense	9,000
Changes in current operating assets and liabilities:
Decrease in accounts receivable	15,000
Decrease in accounts payable	-2,000
Net cash Flows from Operating Activities	$72,000

2.

Statement of Cash Flows (Investing Activities)
Sale of land	115,000
Net cash flow from investing activities	$115,000

3.

Statement of Cash Flows (Financing Activities)
Purchase of Treasury stock	-20,000
Dividend paid	-6,000
Issue of bonds payable	500,000
Net cash flow form financing activities	$474,000

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