Hello All,

I am trying to complete this cash flow computation for the following scenario, but I don't know if I have placed the items correctly. Moreover, how to compute the Net increase (decrease) in cash during the year, or the cash balance at the end of the year. Please help understand and how to go about getting the correct answer.

Scenario:
From the following selected data, compute:

Net cash flow provided (used) by operating activities.
Net cash flow provided (used) by investing activities.
Net cash flow provided (used) by financing activities.
Net increase (decrease) in cash during the year.
The cash balance at the end of the year.
Cash receipts from:
Customers $270,000
Investments by owners 54,000
Sale of building 90,000
Proceeds from bank loan 60,000
Cash payments for:
Wages $ 82,000
Utilities 3,000
Advertising 4,000
Rent 36,000
Taxes 67,000
Dividends 20,000
Repayment of principal on loan 40,000
Purchase of land 106,000
Cash balance at beginning of year $386,000

My computations thus far:
1) Operating Activities
Customers……………………………………… $270,000
Wages…………………………………………… $(82,000)
Rent……………………………………………… $(36,000)
Utilities…………………………………………. $ (3,000)
Taxes……………………………………………. $(67,000)
Advertising……………………………………. $ (4,000)

Net cash flow provided (used) by operating activities $ 78,000

2) Investing Activities
Sale of Building………………………………. $ 90,000
Purchase of Land……………………………. $(106,000)

Net cash flow provided (used) by Investing Activities $ 16,000

3) Financing Activities
Proceeds from bank loan………………………. $ 60,000
Repayment of principle loan………………….. $(40,000)
Dividends……………………………………………. $(20,000)
Investments by owners………………………… $ 54,000

Net cash flow provided (used) by Financing Activities $ 54,000

You're already done the hard part, which is all correct. The above is not the hard part.

Net out your 3 sections. Since yours are all positive, just add them together. If you have any negatives, you subtract them. The resulting "net cash flow" can be negative also. Remember this is stating where cash is going to and where it's coming from. So when you put the 3 sections together, you have one net number of how much cash (net) came in, or went out.

It's like if your checking account had $235 at the beginning of the year... and during the year you made deposits and wrote checks. At the end of the year your balance is $200. So you had a net ($35) in cash flow.

You have a beginning cash balance. If you have positive cash flow, add it. If you have negative cash flow, subtract it. And that's your ending balance.