Problem B, Cash Flow CWH (unrelated to Problem A) provides youwith comparative statements of financial position and someadditional information. Using the indirect method, calculate cashflow from operating activities. Then as best you can, calculatecash inflow/outflow from Investing activities and from Financingactivities (you’ll need to make assumptions, you do not havecomplete information and it isn’t available).
12/31/19 12/31/2020
Cash..................................................................$ 5,000 $ 17,000
Accounts receivable ..........................................35,000 45,000
Inventory...........................................................75,000 63,000
Total current assets ...........................................115,000 125,000
Land..................................................................100,000 100,000
Buildings...........................................................5,000,000 5,000,000
Equipment.........................................................12,000,000 21,000,000
Accumulated Depreciation................................(4,000,000) (4,750,000)
NetPP&E..........................................................13,100,000 21,350,000
Patents...............................................................7,000,000 5,800,000
TotalAssets.......................................................$20,215,000 $27,275,000
Accounts payable ..............................................$ 21,000 $ 45,000
Accrued expenses..............................................25,000 60,000
Income taxes payable........................................12,000 35,000
Total current liabilities......................................58,000 140,000
Long term debt..................................................12,000,000 16,000,000
Common stock ..................................................1,500,000 2,000,000
Retained earnings..............................................6,657,000 9,135,000
Total Liabilities and Equity ..............................$20,215,000 $27,275,000
[NOTE: I have posted an Excel spreadsheet with the aboveinformation for your use, if you wish. If you do that, please justcut and paste a copy into your word submission. Make sure it’sreadable, probably need to format the page as landscape format, notportrait.]
Additional information provided:
• Net income = $2,600,000
• Dividends were declared and paid during the year.
• Depreciation expense = $750,000
• Make reasonable assumptions as need be.
Required:
1. Calculate cash flow from operating activities, showing yourcomplete calculation. The number alone is not sufficient.
2. Calculate cash provided by/used in investing activities(you’ll need to make some assumptions).
3. Calculate cash provided by /used in financing activities(again, you’ll need to make some assumptions)
4. Show that the sum of the three cash flow numbers is equal tothe change in cash.
