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Investing and Financing Cash Flows The following information was obtained from Melville Company's comparative balance sheet. End of Year Beginning of Year Cash $19,000 $9,000

Investing and Financing Cash Flows

The following information was obtained from Melville Company's comparative balance sheet.

End of Year Beginning of Year
Cash $19,000 $9,000
Accounts receivable 50,000 35,000
Inventory 55,000 49,000
Prepaid rent 6,000 8,000
Long-term investments 21,000 32,000
Plant assets 140,000 106,000
Accumulated depreciation (42,000) (32,000)
Accounts payable 24,000 22,000
Income tax payable 4,000 6,000
Common stock 127,000 92,000
Retained earnings 106,000 91,000
Capital expenditures 15,200

Assume that Melville Companys income statement showed depreciation expense of $10,000, a gain on sale of investments of $7,000, and a net income of $60,000.

During the year, Melville Company purchased plant assets for cash, sold investments for cash (the entire $7,000 gain developed during the year), and issued common stock for cash. The firm also declared and paid cash dividends.

What items and amounts will appear in (a) the cash flow from investing activities and (b) the cash flow from financing activities sections of a statement of cash flows?

Use a negative sign with cash outflow answers.

a.

Cash flow from investing activities will show
Purchase of plant assets Answer
Sale of investments Answer

b.

Cash flow from financing activities will show
Issuance of common stock Answer
Payment of dividends Answer

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