Question

Below is the balance sheet for Northern Comfort Company for December 31 of 2015 and 2016.

2015 2016 2015 2016 900 1,100 Accounts payable 2,700 3,300 3,300 5,400 6,600 8,100 9,900 9,900 12,100 18,000 22,000 Total liab. & equity 18,000 22,000 Cash Accounts receivable Inventory Current assets Net fixed assets Total assets 2,700 2,700 3,300 Long-term debt 6,300 7,700 Total liabilities 11,700 14,300 3,300 Current liabilities 2,700 Equity The income statement for 2016 is also given: Amount 52,800 29,040 Depreciation 5,280 18,480 5,280 3,300 Net income 9,900 Sales Cost EBIT Interest Taxes The company paid $7.700 in dividends to shareholders at the end of the year

Part1

What was the cash flow from operating activities?

Part 2

What was the cash flow from long-term investing activities?

Part 3

What was the cash flow from financing activities?

Part 4

What was the net cash flow for the year?

Answer 1

Answer:

1. $14,580

2. (-$7,880)

3. (- $6,500)

4. $200

Explanation:

(1)

Cash Flow from Operating Activities:

= Net Income + Depreciation - Increase in A/R - Increase in Inventory + Increase in A/P

= 9,900 + 5,280 - $600 - $600 + $600

= $14,580

(2) Purchase of Fixed Assets:

= Net Fixed Assets in 2016 + Depreciation - Net Fixed Assets in 2015

= $14,300 + $5,280 - $11,700

= $7,880

Therefore, the cash flow from long-term investing activities is the purchase of fixed assets worth of (- $7,880).

(3) Cash Flow from Financing Activities:

= Borrowing from Long-term Debt - Dividends Paid

= (6,600 - 5,400) - $7,700

= $1,200 - $7,700

= -$6,500

(4) Net cash flow for the year:

= Cash Flow from Operating Activities + Cash Flow from Long-term Investing Activities + Cash Flow from Financing Activities

= $14,580 + (- $7,880) + (-$6,500)

= $200