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Compute amount of Net Cash Flow FYE 12/31/05 from 1) Investing Activities and 2) Financing Activities

Following transactions occurred during 2005

a) Acquired machine with cost of $225,000 by issuing shares of common stock
b) Bonds, with $500,000 of face value and 10 years till maturity, were issued at a $35,000 premium
c) Collected $175,000 on acct
d) Declared $65,000 of dividends. Pd $50,000 declared in 2005 plus another $25,000 that was declared in 2004
e) Equipment was purchased for $250,000 by issuing a 5-year note for $200,000 and paying the balance in cash
f) Investments classified as Avail-For-Sale, with carrying value of $65,000 were sold at a $10,000 loss
g) Issued 10,000 shares of $20 par preferred stock at $35 per share
h) Machines having a book value of $125,000 were sold at a $15,000 gain
i) Purchased $315,000 of inventory on account
j) Reacquired previously issued common stock for $85,000
k)Received $225,000 for a note that matured, including $40,000 of interest
l) Trading Investments were purchased for $35,000 cash

Compute amt of Net Cash Flow FYE 12/31/05 from 1) Investing Activities 2) Financing Activities

CLUE: Net Cash flow from financing activities exceeds net cash flow from investing activities by $395,000

Solution Preview

First we add the investing activities that bring in cash flow these are Machines Sold 140,000 and Avail-for-Sale that is 55,000 this gives us a total cash inflow of 195,000.
Then we add the cash outflow from investing activities that is investment in machinery that is ...

Solution Summary

You will find the answer to this puzzling assignment inside...

$2.19