Question

# Excel Online Structured Activity: Statement of cash flows You have just been hired as a financial...

Excel Online Structured Activity: Statement of cash flows

You have just been hired as a financial analyst for Barrington Industries. Unfortunately, company headquarters (where all of the firm's records are kept) has been destroyed by fire. So, your first job will be to recreate the firm's cash flow statement for the year just ended. The firm had \$100,000 in the bank at the end of the prior year, and its working capital accounts except cash remained constant during the year. It earned \$5 million in net income during the year but paid \$700,000 in dividends to common shareholders. Throughout the year, the firm purchased \$5.4 million of machinery that was needed for a new project. You have just spoken to the firm's accountants and learned that annual depreciation expense for the year is \$460,000; however, the purchase price for the machinery represents additions to property, plant, and equipment before depreciation. Finally, you have determined that the only financing done by the firm was to issue long-term debt of \$1 million at a 7% interest rate. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below.

What was the firm's end-of-year cash balance? Recreate the firm's cash flow statement to arrive at your answer. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest dollar, if necessary.

 Cash Flow Statement Net Income 5000000 Cash Flow from operating activities Add Depreciation 460000 Total Cash flow from operating actiivities 5460000 Cash flow from investing activities less Increase in Plant and machinery -5400000 total from investing -5400000 Cash flow from financing activities less Dividends Paid -700000 Add Issue of long term debt 1000000 Total from financing 300000 Net Change in Cash flow = Operating+investing+financing 360000

Ending Cash balance = Beginning Cash Balance + Net Change in Cash Flow
= \$100000+\$360000
Ending Cash Balance = \$460,000

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