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ACC355 week 7 soltions 102711

# ACC355 week 7 soltions 102711 - Purchase of investments...

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PROBLEM 23-6 (a) Net Cash Flow from Operating Activities Cash received from customers. ... \$524,850 1 Cash payments: Cash payments to suppliers \$375,750 2 Cash payments for operating expenses 105,675 3 481,425 Net cash provided by operating activities \$ 43,425 1 \$540,000 \$10,500 – \$4,650* = \$524,850 2 \$380,000 + \$6,000 \$10,250 = \$375,750 3 \$120,450 – \$8,625 – \$750** – \$5,400 = \$105,675 *Writeoff of accounts receivable. (\$1,500 + \$5,400 – \$2,250) **Increase in accrued payables (b) MARCUS INC. Statement of Cash Flows For the Year Ended December 31, 2010

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Cash flows from operating activities Net income \$42,500 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense \$ 8,625 Gain on sale of investments (3,750) Loss on sale of machinery 800 Increase in accounts receivable (net) (9,750)* Increase in inventory (6,000) Increase in accounts payable 10,250 Increase in accrued payables 750 925 Net cash provided by operating activities 43,425
PROBLEM 23-6 (Continued) Cash flows from investing activities
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Unformatted text preview: Purchase of investments \$22,250 – (\$38,500 – \$25,000). ................. (8,750) Purchase of machinery \$30,000 – (\$18,750 – \$3,750). ................... (15,000) Addition to buildings. .................................. (11,250) Sale of investments. ..................................... 28,750 Sale of machinery. ........................................ 2,200 Net cash used by investing activities. ....... (4,050) Cash flows from financing activities Reduction in long-term note payable. ........ (10,000) Cash dividends paid. .................................... (21,125) Net cash used by financing activities. ....... (31,125 ) Net increase in cash. ............................................ 8,250 Cash, January 1, 2010. ......................................... 33,750 Cash, December 31, 2010. .................................... \$42,000 *(\$70,500 – \$2,250) – (\$60,000 – \$1,500)...
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ACC355 week 7 soltions 102711 - Purchase of investments...

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