Inland Equipment, Inc., assembled the following data related to its cash transac

ID: 2582682 • Letter: I

Question

Inland Equipment, Inc., assembled the following data related to its cash transactions for the year ended June 30, 2010.

Payment of Dividends: $6,000
Proceeds from issuance of stock: 20,000
Collections from customers: 200,000
Proceeds from sale of land: 60,000
Payments to suppliers: 80,000
Purchase of equipment: 40,000
Payments to employees: 70,000
Payment of note payable: 30,000

Prepare Inland Equipment’s statement of cash flows for the year ended June 30, 2010 using the direct method. Inland Equipment’s cash balance at December 31, 2009 was $12,000.

Explanation / Answer

Inland Equipment, Inc.

Cash flow statement for the year ended June 30,2010

Cash flows from operating activities

Cash receipts from customers

200000

Cash paid to suppliers

(80000)

Cash paid to employees

(70000)

Net cash generated from operating activities

50000

Cash flows from investing activities

Proceeds from sale of land

60000

Purchase of equipment

(40000)

Net cash generated from investing activities

20000

Cash flows from financing activities

Proceeds from issuance of stock

20000

Payment of note payable

(30000)

Payment of dividends

(6000)

Net cash generated from financing activities

(16000)

Net increase in cash and cash equivalents

54000

Cash and cash equivalents at the beginning of period

12000

Cash and cash equivalents at the end of period

66000