Im attempting to create a cash flow statements for the following figures, to dou
ID: 2330946 • Letter: I
Question
Im attempting to create a cash flow statements for the following figures, to double check if my calculations are right can someone figure them out using T-accounts, the operating, investing and finacial activities of the following info, thanks.
ADDITIONAL INFO
PP&E costing 141,000 was purchased for cash during year
PP&E costing 36,000 was sold during year
other expenses include 35,500 dep'n exp on PP&E
Explanation / Answer
Cash flow from Operating Activities: $ $
Profit before tax as per P/L account : 69,930
Add/Less adjustments for non cash items debited/credited to P/L account.
Add: Interest Expense( to be classified under financing activities) 2,940
Add: Depreciation 35,500
Less: Gain on sale of Plant and Equipment (5 000)
Less: Consultation service receivable (20,500)
Total Adjustments 12,940
Cash generated from operation 82,870
Less: Income Tax paid (7,270)
Net Cash From Operating Activities 75,600
Important notes :
Cash from operating activites is calculated considerig working capital changes as well, since no information is available the same is not considered.
Also Income tax paid is deducted from cash generated from operation since the number for tax paid is unavailable tax expense as shown in income statement is assumed as tax paid during the year and is deducted for calculating cash flow from operation.
Cash flow from Investing activities
Cash paid for purchase of PP&E during the year (141,000)
Cash received from sale of PP&E during the year 41,000
Net Cash used in Investing Activities (100,000)
Cash Flow from Financing activities:
Interest Expense ( 2,940)
Net cash used in Financing Activities (2,940)
Important note:
Interest paid should be shown under financing activities, the profit/loss figure for interest expense may also include interest payable on loan during the year, however actual interest paid may be different.