Question

Problem 8 The balance sheet data of Naley Company at the end of 2019 and 2018 follow: 2019 2018 $_50.000 Cash Accounts receivable (net) $ 70,000 90,000 120,000 Merchandise inventory 140,000 Prepaid expenses Buildings and equipment 90,000 50,000 150,000 180,000 (36,000) Accumulated depreciation-buildings and equipment Land Totals Accounts payable Accrued expenses Notes payable-bank, long-term Mortgage payable $654.000 $136,000 24,000 (16,000) 80,000 $514.000 $110,000 36,000 80,000 60,000 418,000 318,000 Common stock, $10 par Retained earnings (deficit) 16,000 $654.000 30,000) $514.000 Land was acquired for $100,000 in exchange for common stock, par $100,000, during the year; all equipment purchased was for cash. Equipment costing $10,000 was sold for $4,000; book value of the equipment was $8,000 and the loss was reported as an ordinary item in net income. Cash dividends of $20,000 were charged to retained earnings and paid during the year; the transfer of net income to retained earnings was the only other entry in the Retained Earnings account. For the year ending December 31, 2019, calculate the following amounts: a) The net cash provided (used) by operating activities b) The net cash provided (used) by investing activities c) The net cash provided (used) by financing activities Show work but do NOT prepare the statement of cash flow.

Answer 1

in $ in $ Date Jan-01 Particulars Balance b/d 46,000 20,000 Building and Equipment in $ Date Particulars 150,000 Cash Accumulated Depreciation Loss on sale (8000-4000) 40,000 Dec-31 Balance c/d 190,000 Total in $ 4,000 2,000 4,000 66,000 Cash-Purchase (bal.fig.) Total 180,000 190,000 Particulars (1). Operating Activities Increase in Retained Earnings (30000+16000) (+) Dividends Net income Adjustments to reconcile net income to net cash provided by operating activities Depreciation expense Loss on sale of asset Increase in Acc Rec (120000-90000) Increase in Inventory (140000-90000) Decrease in Prepaid expenses (50000-20000) Increase in Accounts Payable (136000-110000) Decrease in accrued expenses (36000-24000) Sub-Total Net Cash provided by Operation Activities (0)| Dr 22,000 4,000 -30,000 -50,000 30,000 26,000 -12,000 Date Particulars Buidling and Equipment Accumulated Depreciation in $ Date Particulars 2,000 Jan-01 Balance b/d Depreciation exp (bal. fig.) 36,000 38,000 Total in $ 16,000 22,000 Dec-31 Balance c/d Total cld 38 38,000 -10,000 56,000 O ins| ins| Particulars (u). Investing Activities Sale of equipment Purchase of equipment for cash Net Cash (used in) Investing Activites (1) 4,000 -40,000 -36,000 in $ - ins| Particulars (111). Financing Activities Increase in Mortage (-) Repayment of Note (-) Dividend paid Net Cash (used in) Financing Activities () 60,000 -80,000 -20,000 -40,000 Note The land purchased from issuing stock is a non-cash transaction. Hence, it is not considered.