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# Cash Flow

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Cash flows: It is typical for Jane to plan, monitor and assess her financial position using cash flow over a given period, typically a month. Jane has a savings account and her bank loans money a 6% per year while it offers short term investment rates of 5%. Jane's cash flows during August were as follows:
Item Cash inflow Cash outflow
Clothes \$1,300
Dining out 470
Groceries 790
Salary 4400
Auto payment 344
Utilities 280
Mortgage 1,170
Gas 212
a. Determine Jane's total cash inflows and cash outflows.
b. Determine the net cash flow for the month of August.
c. If there is a shortage, what are a few options open to Jane?
d. If there is a surplus, what would be a prudent strategy for her to follow?

See attached document.

#### Solution Summary

The solution provides step by step method for the calculation of total cash inflow, total cash outflow and net cash flow. Formula for the calculation and Interpretations of the results are also included.

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## Tovar Corporation: Cash Flow Statement

Please note that values are different here than on the attachment problem 14-4B.

Prepare the net cash provided by operating activities section of the company's statement of cash
flows for the year ended December 31, 2008, using the indirect method.

The three accounts shown below appear in the general ledger of Tovar Corp.during 2008.

Equipment
Date Debit Credit Balance
Jan. 1 Balance 160,000
July 31 Purchase of equipment 70,000 230,000
Sept. 2 Cost of equipment constructed 53,000 283,000
Nov. 10 Cost of equipment sold 49,000 234,000

Accumulated Depreciation?Equipment
Date Debit Credit Balance
Jan. 1 Balance 71,000
Nov. 10 Accumulated depreciation on
equipment sold 30,000 41,000
Dec. 31 Depreciation for year 28,000 69,000
Prepare partial statement of
cash flows?indirect method.

Retained Earnings
Date Debit Credit Balance
Jan. 1 Balance 105,000
Aug. 23 Dividends (cash) 14,000 91,000
Dec. 31 Net income 67,000 158,000

Instructions
From the postings in the accounts, indicate how the information is reported on a statement of cash flows using the indirect method.The loss on sale of equipment was \$5,000. (Hint: Cost of equipment constructed is reported in the investing activities section as a decrease in cash of \$53,000.)

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