Question

Northern Corporation uses the Indirect Method to prepare its Cashflow Statement.  

The 10 items in the table below belong on Northern’s Cashflow Statement which follows the table.

First write the item and its dollar amount under the activity it correctly belongs under (Operating, Investing or Financing) on the Cashflow Statement.

Next, for each item identify whether it is a cash Inflow (or positive adjustment to Net Income in the Operating Section) by leaving the dollar amounts positive. If the item is a cash Outflow (or a negativeadjustment to Net Income in the Operating Section), make the numbers negative by adding ( ) parenthesis around them.

            Also calculate the total dollar amount for each of the three activities - being careful to use parenthesis if the total is negative.

Cashflow Items                                                  Amount

Increase in Accounts Payable	$   330,000
Annual Depreciation Expense	220,000
Paid back Long Term Loan Principle	400,000
Purchased new Manufacturing Equipment	75,000
Proceeds from Acquiring Short Term Loan	500,000
Increase in Accounts Receivable	670,000
Dividend Paid on Common Stock	300,000
Proceeds from sale of investments	165,000
Purchase of Treasury Stock	850,000
Decrease in Supplies Inventory	45,000

Northern Corporation

Statement of Cashflows

For the Year Ended Dec. 31, 20_ _

Cash flows from Operating Activities:

            Net Income                                                                                        $   2,535,000

           

                                                                                                                        ____________

            Net Cash provided by Operating Activities                                   $  

Cash flows from Investing Activities:

           

                                                                                                                        ____________

            Net Cash from Investing Activities                                                $      

Cash flows from Financing Activities:

           

____________

            Net Cash provided by Financing Activities                                   $   

            Total Net Increase in Cash                                                              $    1,500,000

Answer 1

Cash Flow Statement

Cash flow from Operating Activities
Net Income	$2,535,000
Increase in Accounts payable	$330,000
Depreciation expense	$220,000
Increase in Accounts receivable	($670,000)
Decrease in supplies inventory	$45,000
Net cash provided by operating activities (A)	$2,460,000
Cash flow from Investing Activities
Purchased new manufacturing equipment	($75,000)
Proceeds from sale of investments	$165,000
Net cash from investing activities (B)	$90,000
Cash flow from Financing activities
Paid back long term loan principal	($400,000)
Proceeds from acquiring short term loan	$500,000
Dividend paid on common stock	($300,000)
Purchase of Treasury stock	($850,000)
Net cash provided by financing activities (C)	($1,050,000)
Total net increase in cash (A + B + C)	$1,500,000