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 – ?

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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