Posted: April 6th, 2016

# How to calculate the cash paid to suppliers and employees?

The following information is available from Gray Co.’s accounting records for the year ended December 31, 2010 (amounts in million):

Cash dividends declared and paid – \$350
Retirement of bonds payable at maturity – \$200
Interest and taxes paid – \$150
Proceeds of common stock issued – \$550
Proceeds from the sale of land – \$125
Collections from customers – \$3,175
Cash paid to suppliers and employees – ?
Purchase of buildings and equipment – ?

Required:
a) The net cash provided by operating activates for Gray Co. for the year ended December 31, 2010, is \$1,225 million. Calculate the cash paid to suppliers and employees.
b) The increase in cash for the year was \$250 million. Calculate the amount of cash used to purchase buildings and equipment. Answer to part (a) should be considered in your calculation. (Hint: Set up a model of the statement of cash flows to determine the net cash provided (used) by operating and investing activities, and then solve for the missing amounts.)

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