Question

What was the firm's end-of-year cash balance? Recreate the firm's cash flow statement to arrive at your answer. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest dollar, if necessary.

Answer 1

Answer:

$340,000

Explanation:

Statement of cash flow ( year-end December 31, 2012)

Operating activities Cashflow

Net Income                         = $5,000,000

Add back: Depreciation     = $440,000

Net cashflow                      = $5,440,000

Investing activities Cashflow

Cash paid for machinery   = ($5,400,000)

Net cashflow                      = ($5,400,000)

Financing activities Cashflow

Cash receipt from issuing long term debt  =$1,000,000

Cash paid for dividends                               =(800,000)

Net cashflow                                                 =$200,000

Net increase              = ($5,440,000-$5,400,000+$200,000)

Net increase in cash = $240,000

Opening balance as at 1 Jan 2012    =$100,000

Closing balance as at 31 Dec 2012    =($100,000+$240,000) = $340,000