Riley Company borrowed $34,000 on April 1, Year 1 from the Titan Bank. The note issued by Riley carried a one year term and a 4% annual interest rate. Riley earned cash revenue of $1,000 in Year 1 and $800 in Year 2. Assume no other transactions. The amount of cash flow from operating activities that would appear on the Year 2 statement of cash flows would be:

the amount that should be reported is -$560

Explanation:

The computation of the amount that should be reported in the operating activities section of the cash flow statement is shown below:

Revenues in year = $800

Less: total interest paid i.e. -$1,360

($34,000 × 4% × 9 months ÷ 12 months) + ($34,000 × 4% × 3 months ÷ 12 months)

So, the amount that should be reported is -$560

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.