Star Company provided the following data for the preparation of the statement of cash flows for the current year using the direct method.

Cash balance, beginning 1,500,000

Cash paid to purchase inventory 7,800,000

Cash received from sale of trading securities 2,500,000

Cash paid for interest 450,000

Cash paid to repay a loan 1,000,000

Cash collected from customers 10,000,000

Cash received from issuance of ordinary shares 1,200,000

Cash paid for dividend 2,000,000

Cash paid for income taxes 1,350,000

Cash paid to purchase trading securities 1000,000

1. What is the net cash provided by operating activities?

a. 1,900,000

b. 2,900,000

c. 2,350,000

d. 400,000

2. What is the net cash used in financing activities?

a. 3,000,000

b. 2,000,000

c. 1,800,000

d. 4,200,000

3. Whst is the cash balance at year end?

a. 3,400,000

b. 1,600,000

c. 1,400,000

d. 2,400,000

Answer:

1.

d. 400,000

2.

c. 1,800,000

3.

b. 1,600,000

Step-by-step explanation

Star Company Statement of cash flows for the current year (Direct method)

Cash from operating activities

Cash collected from customers......................................................10,000,000

Less cash paid for:

Purchase inventory.................................................7,800,000

Interest.......................................................................450,000

Income taxes...........................................................1,350,000........(9,600,000)

Net cash flow from operating activities................................................400,000

Cash from investing activities

Cash received from sale of trading securities...............2,500,000

Cash paid to purchase trading securities.....................(1,000,000)

Net cash flow from investing activities................................................1,500,000

Cash from financing activities

Cash received from issuance of ordinary share...........1,200,000

Cash paid to repay a loan.............................................(1,000,000)

Cash paid for dividend..................................................(2,000,000)

Net cash flow from financing activities..................................................(1,800,000)

Net increase in cash.................................................................................100,000

Cash balance, beginning........................................................................1,500,000

Cash balance, at the end........................................................................1,600,000

1. The net cash provided by operating activities is 400,000.

2. The net cash used in financing activities is 1,800,000.

3. The cash balance at year end is 1,600,000.