Question

In preparation for developing its statement of cash flows for the year just ended, D-Rose Distributors collected the following information:

	($ in millions)
Purchase of treasury bills (considered a cash equivalent)		7.2
Sale of preferred stock		151.2
Gain on sale of land		5.2
Proceeds from sale of land		26.2
Issuance of bonds payable for cash		141.2
Purchase of equipment for cash		31.2
Purchase of GE stock		36.2
Declaration of cash dividends		135.2
Payment of cash dividends declared in previous year		131.2
Purchase of treasury stock		121.2
Payment for the early extinguishment of long-term notes (carrying (book) value: $100 million)		111.2

  
Required:
1. Prepare the investing activities section of D-Rose's statement of cash flows.
2. Prepare the financing activities section of D-Rose's statement of cash flows.
(For all requirements, list any cash outflow with a minus sign. Enter your answer

1.	Net cash INFLOWS from Investing Activities OR Net cash OUTFLOWS flow from Investing Activities	?	Millions
2.	Net cash INFLOWS from Investing Activities OR Net cash OUTFLOWS flow from Investing Activities	?	Millions

Answer 1

cash flow from investing activities pertains to use of cash for long term purposes like purchase of fixed assets , investments, sale of fixed assets , investments etc.,

cash flow from financing activites pertains to issue of equity, debt, payment of interest , dividend and redemption of debt

Net cash OUTFLOWS flow from Investing Activities	($ in millions)
Proceeds from sale of land	26.2
Purchase of equipment for cash	-31.2
Purchase of GE stock	-36.2
Net cash OUTFLOWS flow from Investing Activities	-41.2

Net cash OUTFLOWS flow from financing activities	($ in millions)
Sale of preferred stock (Assumed that these represent proceeds from prefered stock of the company)	151.2
Issuance of bonds payable for cash	141.2
Payment of cash dividends declared in previous year	-131.2
Purchase of treasury stock	-121.2
Payment for the early extinguishment of long-term notes (carrying (book) value: $100 million)	-111.2
Net cash OUTFLOWS flow from financing activities	-71.2

we have not considered the following

Purchase of treasury bills (considered a cash equivalent)- as this is already treated as cash equivalent will not come in investing activity

Gain on sale of land- we will be considering sale proceeds from land instead of gain

Declaration of cash dividends- only payment of dividend will be considered not this one