Question

Maggna Inc had the following transactions during the current financial reporting period.
Net Income	$86,000
Depreciation	$18,000
Decrease in accounts receivable	$35,000
Increase in inventories	$14,500
Increase in accounts payable	$34,000
Decrease in income taxes payable	$36,700
Decrease in wages payable	$18,000
Proceeds on Sale of Equipment	$80,000
Repayment of bonds	$50,000
Issuance of Common shares	$10,000
Proceeds on sale of land	$50,000
Loss on sale of land	$20,000
Payment of dividends	$40,000
Required: Determine the cashflow for Operating, Investing & Financing activities for the company and calculate the net change in cash using the Indirect Method

Answer 1

Operating activities :

Net income	$86,000
Depreciation	$18,000
Loss on sale of land	$20,000
Decrease in accounts receivable	$35,000
Increase in inventories	$(14,500)
Increase in accounts payable	$34,000
Decrease in income taxes payable	$(36,700)
Decrease in wages payable	$(18,000)
Cash flows from operating activities	$123,800

Investing activities

Proceeds from sale of equipment	$80,000
Proceeds from sale of land	$50,000
Cash flows from investing activties	$130,000

Financing activties

Repayment of bonds	$(50,000)
Issuance of common shares	$10,000
Payment of dividends	$(40,000)
Cash flows from financing activities	$(80,000)

Net in cash = Cash flows from operating activities + Cash flows from investing activties + Cash flows from financing activties

= $123,800 + $130,000 - $80,000

= $173,800