Question

The following information is available from Bromfield Co.’s accounting records for the year ended December 31, 2019 (amounts in millions): Cash dividends declared and paid $ 340 Interest and taxes paid 91 Collections from customers 1,327 Payment of long-term debt 206 Purchase of land and buildings 153 Cash paid to suppliers and employees 801 Issuance of preferred stock 311 Proceeds from the sale of equipment 44 Required: 1. Calculate the net cash provided (used) by operating activities for Bromfield Co. for the year ended December 31, 2019. 2. Calculate the net cash provided (used) by investing activities. 3. Calculate the net cash provided (used) by financing activities. Calculate the net increase (decrease) in cash for the year.

Answer 1

Step-by-step explanation:

The preparation of the Cash Flows from three Activities—Indirect Method is shown below:

1. Cash flow from Operating activities

Collections from customers $1,327

Less: Cash paid to suppliers and employees -$801

Less: Interest and taxes paid -$91

Net Cash flow from Operating activities $435

2. Cash flow from Investing activities

Purchase of land and buildings - $153

Proceeds from the sale of equipment $44

Net Cash flow from Investing activities -$109

3. Cash flow from Financing activities

Cash dividends declared and paid -$340

Payment of long-term debt -$206

Issuance of preferred stock $311

Net Cash flow from Financing activities -$235

4. The computation net increase (decrease) in cash for the year is shown below:

Net Cash flow from Operating activities $435

Net Cash flow from Investing activities -$109

Net Cash flow from Financing activities -$235

Net increase (decrease) in cash for the year is $91