1. Newport Steam Corporation’s balance sheet accounts as of December 31,19X8, and December 31, 19×9, and the information relating to the 19×9 activities, are presented below.
|
December 31 |
||
|
19×9 |
19×8 |
|
|
ASSETS |
||
|
Cash |
$ 230,000 |
$ 100,000 |
|
Short Term Investments |
300,000 |
0 |
|
Accounts Receivable (net) |
550,000 |
550,000 |
|
Inventory |
680,000 |
600,000 |
|
Long Term Investments |
200,000 |
300,000 |
|
Plant Assets |
1,700,000 |
1,000,000 |
|
Accumulated Depreciation |
(450,000) |
(450,000) |
|
Goodwill |
90,000 |
100,000 |
|
Total Assets |
$3,300,000 |
$2,200,000 |
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
Accounts Payable |
$ 825,000 |
$ 720,000 |
|
Long Term Debt |
325,000 |
0 |
|
Common Stock, $1 Par |
800,000 |
700,000 |
|
Additional Paid in Capital |
370,000 |
250,000 |
|
Retained Earnings |
980.000 |
530,000 |
|
Total Liabilities and Stockholders’ Equity |
$3,300,000 |
$2,200,000 |
Information relating to 19×9 activities is as follows:
(1) Net income for 19×9 was $700,000.
(2) Purchase of short term investments for $300,000, which will mature on 30, 20 0.
(3) Cash dividends declared and paid in 19×9 worth $250,000.
(4) Equipment costing $400,000, having accumulated depreciation of $250,000, was sold in 19×9 for $150,000.
(5) Plant assets worth $1,100,000 were purchased for cash.
(6) A long term investment costing $100,000 was sold for $135,000.
(7) 100,000 shares of $1 par value common stock were sold for $2.20 a share.
(8) Amortization of goodwill for 19×9 was $10,000.
Calculate Newport’s net cash inflows or outflows for (a) operating, (b)investing, and (c)
financing activities. Discuss whether or not the short term investments are cash equivalents.