Net cash inflows from investing activities for 2014 were $15 million. This was calculated by subtracting the acquisition of a building for $17 million and purchase of marketable securities for $10 million from proceeds from the sale of equipment of $16 million and collection of a note receivable with interest of $26 million.
Net cash outflows from financing activities for 2014 were $111 million. This was calculated by subtracting the retirement of common shares for $214 million and cash dividends paid of $58 million from the issuance of common shares for $325 million and short-term notes payable for $18 million.
B) In preparation for developing its statement of cash flows for the y.docx
1. B) In preparation for developing its statement of cash flows for the year ended December 31,
2014, Tim Taylor Company collected the following information:
($ in millions)
Payment for the early extinguishment of long-term notes
(book value $100 million) $107
Sale of common shares 325
Retirement of common shares 214
Loss on sale of equipment 4
Proceeds from sale of equipment 16
Issuance of short-term note payable for cash 18
Acquisition of building for cash 17
Purchase of marketable securities (not a cash equivalent) 10
Purchase of marketable securities (considered a cash equivalent) 2
Cash payment for 3-year insurance policy 6
Collection of note receivable with interest (principal amount, $23) 26
Declaration of cash dividends 66
Distribution of cash dividends declared in 2013 58
Required:
1. In Taylor's statement of cash flows, what were net cash inflows (or outflows) from investing
activities for 2014?
2. In Taylor’s statement of cash flows, what were net cash inflows (or outflows) from
financing activities for 2014?
2. Solution
(1) Computation of net cash inflows(or outflows) from investing activities for 2014.We
have,
(2) Computation of net cash inflows(or outflows) from financing activities for 2014.We
have,
Note:
a) Loss on sale of equipment = Operating Activity
b) Purchase of marketable securities (considered a cash equivalent) = Included in cash
c) Cash payment for 3-year insurance policy = Operating Activity
d) Declaration of cash dividends = Non Cash item
Particulars Amount ($ in million)
Acquisition of building for cash (17.00)
Proceeds from sale of equipment 16.00
Purchase of marketable securities (not a cash equivalent) (10.00)
Collection of note receivable with interest 26.00
Net cash inflow from investing activities for 2014 15.00