Delphin Company provided the following information for 2014: Collection of princ

Question

Delphin Company provided the following information for 2014: Collection of principal on long-term loan to a supplier $35,000 Acquisition of equipment for cash $10,000 Proceeds from the sale of long-term investment at book value $27,000 Issuance of common stock for cash $20,000 Net income for the year was $35,000.00 Depreciation expense was $25,000.00 Redeemed bonds payable $24,000.00 Paid cash dividends $9,000.00 Purchased land by issuing bonds payable $40,000 Accounts receivable increased $5,000.00 Prepaid expenses increased $4,000.00 Accounts payable increased $6,000.00 Salaries payable decreased $3,000.00 The beginning cash balance was $14,000.00 Required: 1. Calculate the amount of cash flows from operating activities using the indirect method. (12 points) 2. How much is cash flows from investing activities? (3 points) 3. How much is cash flows from financing activities? (3 points) 4. How much is the net change in the cash account during the year? (3 points) 5. How much is the ending cash balance? (3 points) Delphin Company provided the following information for 2014: Collection of principal on long-term loan to a supplier $35,000 Acquisition of equipment for cash $10,000 Proceeds from the sale of long-term investment at book value $27,000 Issuance of common stock for cash $20,000 Net income for the year was $35,000.00 Depreciation expense was $25,000.00 Redeemed bonds payable $24,000.00 Paid cash dividends $9,000.00 Purchased land by issuing bonds payable $40,000 Accounts receivable increased $5,000.00 Prepaid expenses increased $4,000.00 Accounts payable increased $6,000.00 Salaries payable decreased $3,000.00 The beginning cash balance was $14,000.00 Required: 1. Calculate the amount of cash flows from operating activities using the indirect method. (12 points) 2. How much is cash flows from investing activities? (3 points) 3. How much is cash flows from financing activities? (3 points) 4. How much is the net change in the cash account during the year? (3 points) 5. How much is the ending cash balance? (3 points)

Explanation / Answer

Indirect Method PARTICULARS AMOUNT AMOUNT Operating Activities Net Income 35000 Add : Depreciation for the year 25000 Changes in Assets and liabilities Less : Increase in A/c receivable (25000 - 15000) $5,000 Less: Increase in Prepaid Insurance(19000 - 13000) $4,000 Less : Decrease in Salary payable (7000-6000) $3,000 Add: Increase in Accounts payables (30000 - 19000) $6,000 Cash from operating activities $54,000 Investment Activities Sales of Longterm Investments $27,000 Less :Purchase of Equipment $10,000 Collection of long term loan 35000 $52,000 Cash from Investment Activities Finance Activities Common stock issue $20,000 Less :Redemption of Bonds $24,000 Less: Cash dividends paid $9,000 Cash from Finance Activities ($13,000) Total cash from all the activities $93,000 Add: Opening Cash Balance $14,000 Closing cash balance (Balance figure) $107,000

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