Question

Hampton Industries had $58,000 in cash at year-end 2018 and $21,000 in cash at year-end 2019. The firm invested in property, plant, and equipment totaling $300,000 — the majority having a useful life greater than 20 years and falling under the alternative depreciation system. Cash flow from financing activities totaled +$120,000. Round your answers to the nearest dollar, if necessary.

1. What was the cash flow from operating activities? Cash outflow, if any, should be indicated by a minus sign.

   $   

2. If accruals increased by $5,000, receivables and inventories increased by $145,000, and depreciation and amortization totaled $19,000, what was the firm's net income?

   $   

Answer 1

Cash flow from operating activities(balance)(-37000+300,000-120,000)	$143,000
Add:Cash flow from investing activities	(300,000)
Add:Cash flow from financing activities	120,000
Net change in cash(21000-58000)	(37000)
Add:Beginning cash balance	58000
Ending cash balance	21000

Net income(balance)(143,000-19000+145,000-5000)	$264,000
Add:increase in accruals	5000
Less:increase in receivables and inventories	(145,000)
Add:depreciation and amortization expense	19000
Cash flow from operating activities	143,000

NOTE:Decrease in current liabilities is an outflow of cash and vice versa.
Decrease in current assets is an inflow of cash and vice-versa.