Hampton Industries had $39,000 in cash at year-end 2015 and $11,000 in cash at year-end 2016. The firm invested in property, plant, and equipment totaling $210,000. Cash Flow from financing activities totaled +$120,000.
A) What was the cash flow from operating activities?
B) If accruals increased by $15,000, receivables and inventories increased by $50,000, and depreciation and amortization totaled $25,000, what was the firm’s net income?

B) If accruals increased by $15,000, receivables and inventories increased by $50,000, and depreciation and amortization totaled $25,000, what was the firm’s net income?

$102,000

Explanation:

A)

Ending Cash Balance = Opening cash balance + ( net Cash Flow during the year )

Ending Cash Balance = Opening cash balance + ( Cash flow from operating activities + Cash flow from Investing activities + Cash flow from Financing activities )

$11,000 = $39000 + ( Cash flow from operating activities - 210,000 + 120,000 )

$11,000 = $39000 + Cash flow from operating activities - 90,000

$11,000+$90,000-$39,000 = Cash flow from operating activities

Cash flow from operating activities = +62,000

B)

Cash Flow from Operating activities = Net Income + Non cash Items - Increase in Working Capital

62,000 = Net Income + 25,000 - ( 50,000 + 15000 )

62,000 = Net Income + 25,000 - 65,000

62,000 = Net Income - 40,000

Net Income = 62,000 + 40,000 = $102,000