Reference no: EM132487840

Question 1. Calculate cash flow from financing activities.

Question 2. Create a cash flow table. Show that cash effects net to a $450 outflow.

Assume the following income statement and balance sheet information:

Service revenue (all cash) 175

Operating expenses Salaries (all cash) 85

Net income $90

                                     2020                               2019

Current assets

Cash                   $1,250 $                           1,600

Short-term invest.    100                                200

                           $1,350                              $1,800

Liabilities

Borrowings              600                                1,000

Stockholders' equity

Common stock             200                            300

Retained earnings         550                             500

                                  750                             800

                                   $1,350                       $1,800

Other information: The short-term investments are riskless and will be converted to a known amount of cash in 60 days. Borrowings are non- current. No gain or loss occurred when common stock was repurchased.