Question

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 $800,000 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.

Cash at the Beginning of Year $100,000.00

Change in Net Operating Working Capital Except Cash $0.00

Net Income $5,000,000.00

Common Dividends $800,000.00

Machinery Equipment Purchases $5,400,000.00

Depreciation Expense $460,000.00

Long-Term Debt $1,000,000.00

Interest Rate on Long-Term Debt 7.00%

Statement of Cash Flows I.

Operating Activities Formulas   

Net income #N/A   

Depreciation expense #N/A   

Change in net operating working capital except cash $0.00   

Net cash provided by (used in) operations #N/A

Long-Term Investing Activities

Additions to property, plant and equipment #N/A   

Net cash used in investing activities #N/A

Financing Activities   

Increase in long-term debt #N/A   

Payment of common dividends #N/A   

Net cash provided by financing activities #N/A IV. Summary   

Net increase (decrease) in cash #N/A   

Cash at beginning of year $100,000.00   

Cash at end of year #N/A

Answer 1

cash flow statement
cash flow from operating activities
net income	5000000
add depreciation	460000
changes in working capital	0
net cash flow from operating activities		5460000
cash flow from investing activities
purchase of machinery	-5400000
net cash flow from investing activities		-5400000
cash flow from financing activities
dividend paid	-800000
proceeds from issuance of bonds	1000000
net cash flow from financing activities		200000
net cash flow during the year		260000
beginning cash balance		100000
yearend cash flow		360000