Cashflow Assignment

CASHFLOW ASSIGNMENT
1. You are considering an investment in a company that has a negative cash flow from
operations, negative cash flow from investing and positive cash flow from financing. All the
financing in the current year is from short term debt. What does this pattern of cash flow tell
you about the client’s circumstances? How does this affect your investment decision?
2. Negative Cash Flow Operations: Is it a bad signal?
A company generated negative positive from operations but it shows positive amount as
profit after tax. What is the significance of the same?
3. Northgate Publishers, Inc., has sales of $900,000 during 20X1, 80% of them on credit and
20% for cash. During the year, accounts receivables increased from $60,000 to $90,000, an
increase of $30,000. What amount of cash was received from customers during 20X1?
4. Cost of Goods Sold for Northgate Publishers, Inc., during 20X1 was $600,000. Beginning
inventory was $100,000, and ending inventory was $150,000. Beginning trade accounts
payable were $24,000, and ending trade accounts payable were $42,000. What amount of
cash did Northgate pay to suppliers?
5. N o r t h g a t e P u b
income statement. It reported cash paid to employees of $185,000 on its statement of cash
flows. The beginning balance of Accrued Wages and Salaries Payable was $18,000. What was
the ending balance in Accrued Wages and Salaries Payable? Ignore payroll taxes.
6. Neptune Strategy, Inc., provides consulting services. In 20X1, net income was $185,000 on
revenues of $460,000 and expenses of $275,000. The only noncash expense was
depreciation of $35,000. The company has no inventory. Accounts receivable increased by
$5,000 during 20X1, and accounts payable and salaries payable were unchanged.
Prepare a statement of cash flow from operating activities.
7.Wayzata Company saw its cash plummet by $110,000 in 20X0. The company’s president
wants an explanation of what caused the decreased in cash despite income of $60,000. He
has asked you to prepare direct and indirect method statements of cash flows from
operations for 20X0. You have discovered the following information.
 Sale, were $560,000.

 Accounts receivable increased by $130,000.
 Cost of goods sold was $390,000.
 Payments to suppliers were $455,000.
 Accounts payable were decreased by $40,000.
 Inventory increased by $25,000.
 Operating expenses were $95,000, all paid in cash except for depreciation of $30,000.
 Income tax expense was $15,000; taxes payable decreased by $5,000.
Prepare the statement of cashflows from operating activities and Explain why cash
decreased by $110,000 when net income was positive $60,000
8) Johnson & Johnson is a health care company with headquarters in new Brunswick, New
Jersey. Its revenue in the fiscal year ended January 1, 2012 were more than $65 Billion.
Following are the items from the company’s statement of cash flow for that year. Prepare the
section ‘Cash flows from investing activities” for Johnson & Johnson company
Additions to Property, Plant and Equipment $(2,893)

Proceeds from long term debt 4,470
Increase in Accounts receivables (915)
Proceeds from the disposal of assets 1342
Dividend to shareholders 6156
Acquisitions, net of cash acquired (2797)
Depreciation and amortization of property and 3158
intangibles
Purchases of investments (29882)
Sale of Investments 30396
Others( primarily purchase of intangibles) (778)
9) A company has a gross profit of Rs. 3,00,000 from the following
Sales Rs. 6,00,000

Cost of Goods sold Rs. 3,00,000
Comparison of this year and last year inventory and accounts payable showed the following:
Increase in inventory Rs. 20,000
Decrease in Accounts payables Rs. 20,000
How much cash did the company paid to suppliers during the year?
10) Sales Revenue for Northgate publishers was Rs. 2,40,000. The following data were
obtained from the accounting records of Marshall
Bad debt expenses Rs. 2000
Accounts receivable decrease 5000
How much cash was received from customers?
11. The Arcadia company operates a chain of video game arcades. Among the Arcadia’s
activities in 2010 were the following
a. The firm traded four old video games to another amusement company for one new
primal hunt games. The old games were sold for a total of Rs. 3000 cash
b. The company paid off Rs. 60,000 of long term debt by paying of 30,000 cash and
signing a Rs. 30,000 6- month note payable
c. The firm issued debt for Rs. 70,000 cash, all of which was used to purchase new
games for its Northwest Arcade.
d. The company purchased the building for Rs. 100,000 by mortgage on the structure
and paying Rs. 20,000 for cash
e. Debt holders converted Rs. 65,000 debts into common stock
f. Issued a preference shares for Rs. 21,000
Prepare the schedule of financing activities to accompany a statement of cash flows.

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CASHFLOW ASSIGNMENT

2. Negative Cash Flow Operations: Is it a bad signal?

 Sale, were $560,000.

Additions to Property, Plant and Equipment $(2,893)

9) A company has a gross profit of Rs. 3,00,000 from the following

Sales Rs. 6,00,000

Increase in inventory Rs. 20,000

Decrease in Accounts payables Rs. 20,000

Bad debt expenses Rs. 2000

Accounts receivable decrease 5000

How much cash was received from customers?

e. Debt holders converted Rs. 65,000 debts into common stock

f. Issued a preference shares for Rs. 21,000

Prepare the schedule of financing activities to accompany a statement of cash flows.

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