The following is a list of items to be included in the cash flow statement of th

Question

The following is a list of items to be included in the cash flow statement of the Brock- man Lawn Sprinklers Company for the current year: (a) Payment for purchase of trenching equipment, $6,000 7-21 2 (b) Payments to suppliers, $3,200 (c) Receipt from sale of land, $1,000 (d) Collections from customers, $15,800 (e) Withdrawals by owner, $2,500 (f) Receipt from issuance of note payable, $4,000 3(g) Payments to employees, $5,600 (h) Beginning cash balance, $1,200 Required: (I) Prepare the company's cash flow statement. (2) If net sales were $69,000, compute the company's operating cash flow margin.

Explanation / Answer

a) Prepare statement of cash flow :

B) Operating margin = 7000*100/69000 = 10.14%

Cash flow from operating activities Collection from customer 15800 Payment to supplier (3200) Payment to employees (5600) Net cash flow from operating activities 7000 Cash flow from investing activities Purchase of equipment (6000) Sale of land 1000 Net cash flow from investing activities (5000) Cash flow from financing activities Issue notes payable 4000 Withdrawal (2500) Net cash flow from financing activities 1500 Net cash flow 3500 Beginning cash 1200 Ending cash 4700

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