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11 September, 19:00

Hampton Industries had $39,000 in cash at year-end 2015 and $11,000 in cash at year-end 2016. The firm invested in property, plant, and equipment totaling $210,000. Cash Flow from financing activities totaled + $120,000.

A) What was the cash flow from operating activities?

B) If accruals increased by $15,000, receivables and inventories increased by $50,000, and depreciation and amortization totaled $25,000, what was the firm's net income?

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  1. 11 September, 20:51
    0
    A) What was the cash flow from operating activities?

    +62,000

    B) If accruals increased by $15,000, receivables and inventories increased by $50,000, and depreciation and amortization totaled $25,000, what was the firm's net income?

    $102,000

    Explanation:

    A)

    Ending Cash Balance = Opening cash balance + (net Cash Flow during the year)

    Ending Cash Balance = Opening cash balance + (Cash flow from operating activities + Cash flow from Investing activities + Cash flow from Financing activities)

    $11,000 = $39000 + (Cash flow from operating activities - 210,000 + 120,000)

    $11,000 = $39000 + Cash flow from operating activities - 90,000

    $11,000+$90,000-$39,000 = Cash flow from operating activities

    Cash flow from operating activities = + 62,000

    B)

    Cash Flow from Operating activities = Net Income + Non cash Items - Increase in Working Capital

    62,000 = Net Income + 25,000 - (50,000 + 15000)

    62,000 = Net Income + 25,000 - 65,000

    62,000 = Net Income - 40,000

    Net Income = 62,000 + 40,000 = $102,000
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