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Intermediate Problem 3-12

W.C. Cycling had $55,000 in cash at the end of 2014 and $25,000 in cash at the end of 2015. They invested $250,000 in property, plant, and equipment and had $170,000 cash from financing activities. The cash flow from operating activities was $50,000 and the net income was $115,000.

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CASTOR, Vincent Paul
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468 views

Intermediate Problem 3-12

W.C. Cycling had $55,000 in cash at the end of 2014 and $25,000 in cash at the end of 2015. They invested $250,000 in property, plant, and equipment and had $170,000 cash from financing activities. The cash flow from operating activities was $50,000 and the net income was $115,000.

Uploaded by

CASTOR, Vincent Paul
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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W.C. Cycling had $55,000 in cash at year-end 2014 and $25,000 in cash at year-end 2015.

The firm
invested in property, plant, and equipment totaling $250,000. Cash flow from financing activities totaled
+$170,000.

a. What was the cash flow from operating activities?


b. If accruals increased by $25,000, receivables and inventories increased by $100,000, and depreciation
and amortization totaled $10,000, what was the firm’s net income?

W.C. Cycling
Statement of Cash Flows
As of 2015
Operating Activities
Net Income xxx
Depreciation and Amortization xxx
Increase in Accounts Receivable and Inventory xxx
Increase in Accruals xxx
Net Cash Provided (Used) by Operating Activities __________

Investing Activities
Purchased Property, Plant, and Equipment $(250,000.00)
Net Cash Provided (Used) by Investing Activities $(250,000.00)

Financial Activities
Net Cash Provided (Used) by Financing Activities $170,000.00

Summary:
Net Change in Cash xxx
Cash at the beginning of the year $55,000.00
Cash at the end of the year $25,000.00

COMPUTATIONS:
Cash at the end of the year $25,000.00
Cash at the beginning of the year $55,000.00
Net Change in Cash $(30,000.00)
Net Change in Cash $(30,000.00)
Net Cash Provided (Used) by Financing Activities $(170,000.00)
Net Cash Provided (Used) by Investing Activities $250,000.00
Net Cash Provided (Used) by Operating Activities $50,000.00

a. What was the cash flow from operating activities?


Answer: $50,000.00
Net Cash Provided (Used) by Operating Activities $50,000.00
Increase in Accruals $(25,000.00)
Increase in Accounts Receivable and Inventory $100,000.00
Depreciation and Amortization $(10,000.00)
Net Income $115,000.00

b. If accruals increased by $25,000, receivables and inventories increased by $100,000, and


depreciation and amortization totaled $10,000, what was the firm’s net income?
Answer: $115,000.00
W.C. Cycling
Statement of Cash Flows
As of 2015
Operating Activities
Net Income $115,000.00
Depreciation and Amortization $10,000.00
Increase in Accounts Receivable and Inventory $(100,000.00)
Increase in Accruals $25,000.00
Net Cash Provided (Used) by Operating Activities $50,000.00

Investing Activities
Purchased Property, Plant, and Equipment $(250,000.00)
Net Cash Provided (Used) by Investing Activities $(250,000.00)
Financial Activities
Net Cash Provided (Used) by Financing Activities $170,000.00

Summary:
Net Change in Cash $(30,000.00)
Cash at the beginning of the year $55,000.00
Cash at the end of the year $25,000.00

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