In preparing ts cash flow statement for the year ended December 31, 2016, Red Co
ID: 2570845 • Letter: I
Question
In preparing ts cash flow statement for the year ended December 31, 2016, Red Co. gathered the following data: Galn on sale of land Proceeds from sale of land Purchase of Blue, Inc., bonds (face value $219,000) Amortization of bond discount Cash dividends declared Cash dlvidends pald Proceeds from sales of Red Co. common stock $12,900 21,000 355,000 4,400 99,000 75,000 154,000 in ts December 31, 2016, statement of cash flows, what amount should Red report as net cash outhlows from O $376,000. O $334.000 O $321100. O $198,000.Explanation / Answer
Question 1 Answer is Option b) $3,34,000 Investing Activities Receipt from Sale of Land 21,000 Payment forpurchase of Bond -3,55,000 Net cash provided (used) by investing activities -3,34,000 Question 2 Answer is Option d) $51,000 Operating Activities Net Profit 44,000 Adjustments: Non-Cash adjustment: Depreciation 2,700 Due to changes in Working capital: Due to changes in accounts receivable 5,900 Due to changes in Inventories -1,600 Taxes paid - Net Cash provided (used) by operating activities 51,000 Question 3 Answer is Option a) $7,400 Cost of Goods Sold = Purchase + Opening Inventory - Closing Inventory Purchase = Cost of Goods Sold + Closing Inventory - Opening Inventory Purchase = $7,900 + $370 - $670 = $7,600 Cash paid to Suppliers = Opening Accounts Payable + Purchase - Closing Accounts Payable Cash Paid to Suppliers = $310 + $7,600 - $510 = $7,400