The controller of Newstrom Software, Inc., provides the following information as the basis for a statement of cash flows: Cash collected from customers $785,400 Income taxes paid $58,300 Cash paid for interest 22,100 Payment of dividends 35,000 Cash paid to employees and other suppliers of goods and services 221,750 Principal payments on mortgage payable 60,000 Cash paid to suppliers of merchandise 395,540 Principal payments on long-term debt 22,000 Cash received from the issuance of long-term debt 40,000 Proceeds from the issuance of common stock 85,000 Cash received from disposal of equipment 42,500 Purchase of equipment 120,000 Cash received from sale of long-term investments 71,400 Purchase of long-term investments 75,800 I am having trouble classifying what goes into what category (Operating, Investing, or Financing) for the cash flows and so I wanted to ask about this question while I do it. Use a minus sign to indicate any cash outflows: 1. Using the information provided above, calculate the net cash provided (used) by operating activities. $fill in the blank 1 2. Using the information provided above, calculate the net cash provided (used) by investing activities. $fill in the blank 2 3. Using the information provided above, calculate the net cash provided (used) by financing activities. $fill in the blank 3
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
The controller of Newstrom Software, Inc., provides the following information as the basis for a statement of cash flows:
| Cash collected from customers | $785,400 | Income taxes paid | $58,300 | |
| Cash paid for interest | 22,100 | Payment of dividends | 35,000 | |
| Cash paid to employees and other suppliers of goods and services | 221,750 | Principal payments on mortgage payable | 60,000 | |
| Cash paid to suppliers of merchandise | 395,540 | Principal payments on long-term debt | 22,000 | |
| Cash received from the issuance of long-term debt | 40,000 | Proceeds from the issuance of common stock | 85,000 | |
| Cash received from disposal of equipment | 42,500 | Purchase of equipment | 120,000 | |
| Cash received from sale of long-term investments | 71,400 | Purchase of long-term investments | 75,800 |
I am having trouble classifying what goes into what category (Operating, Investing, or Financing) for the cash flows and so I wanted to ask about this question while I do it.
Use a minus sign to indicate any
1. Using the information provided above, calculate the net cash provided (used) by operating activities.
$fill in the blank 1
2. Using the information provided above, calculate the net cash provided (used) by investing activities.
$fill in the blank 2
3. Using the information provided above, calculate the net cash provided (used) by financing activities.
$fill in the blank 3
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