Question

The December 31, 2013, balance sheet of Schism, Inc., showed long-term debt of $1,470,000, $154,000 in the common stock account and $2,790,000 in the additional paid-in surplus account. The December 31, 2014, balance sheet showed long-term debt of $1,720,000, $164,000 in the common stock account and $3,090,000 in the additional paid-in surplus account. The 2014 income statement showed an interest expense of $101,000 and the company paid out $159,000 in cash dividends during 2014. The firm’s net capital spending for 2014 was $1,100,000, and the firm reduced its net working capital investment by $139,000. (Enter your answer as directed, but do not round intermediate calculations.)
Required:
What was the cash flow to creditors during 2014?

Required:
What was the firm’s cash flow to stockholders during 2014?

Required:
What was the firm’s cash flow from assets during 2014?

Required:
What was the firm’s operating cash flow during 2014?

Answer 1

Answer:

The cash flow to creditors during 2014 was $139000,the amount by which net working capital investment has reduced.

The stockholders invested $241,000 more into the business

The net cash flows from asset is the $1,100,000 net firm's capital spending

Lastly,the operating cash flow is $240,000 as calculated below

Explanation:

Net working capital investment denotes the amount of cash the company parted with in 2014 in financing its current obligations.

Stockholders as the owners of the company made more cash available to the company in 2014 by investing more cash resources in it as follows:

Common stock account increased by $10000($164000-$154000)

Additional paid-in surplus increased by $300000($3090000-$2790000)

The gives $400000 cash from stockholders minus dividends of $159000

Operating cash flow

Net income                                    $0

add interest                                   $101000

Reduction in net working capital $139000

Operating cash flow                     $240000