Answer:
Cash flow generated for the year: 71,790
Explanation:
From the information given we use the indirect method, we adjust net income for the non-monetary terms and then, adjust for the changes in working capital
The sale of assets will be enter under investing activities for the cash received regardless of the gain/loss at disposal
the stock transactions are considered financing from the firms perspective.
<u>Operating Activities:</u>
Net income 60,100
depreciation 16,540
loss at disposal 230
(21,770 - 9,770 = 12,000 against 11,770)
amortization 2,500
adjusted income: 79,370
<em>changes in working capital:</em>
increase in current assets: (29,000)
increase in current liabilities: <u> 14,770 </u>
net change in working capital 14,230
from operating activities: 93,600
<u>Investing Activities</u>
sale of equipment 11 ,770
purchase of stocks (16,000)
Building improvements <u> (28,770) </u>
from investing activities (33,000)
<u>Financing Activities</u>
Issuance of bonds payable 52, 190
Cash dividends (30,000)
Purchase of treasury Stocks <u> (11, 000) </u>
from financing activities 11, 190
Cash flow generated for the year:
93,600 - 33,000 + 11,190 = 71,790
