Problem 12-7B Prepare a Statement of Cash Flows [LO12-1, L012-2] A comparative b
ID: 2436400 • Letter: P
Question
Problem 12-7B Prepare a Statement of Cash Flows [LO12-1, L012-2] A comparative balance sheet and income statement for Groton Company follow Groton Company Comparative Balance Sheet December 31, 2011 and 2010 2011 2010.1 Assets Cash Accounts receivable Inventory Prepaid expenses $ 3 $ 14 314 233 162 202 12 10 Total current assets 491 459 Property, plant, and equipment Less accumulated depreciation 513 434 (87) (73) Net property, plant, and equipment 426 361 Long-term investments 27 36 Total assets $ 944 $ 856 Liabilities and Stockholders' equity Accounts payable Accrued liabilities s 303 $ 227 72 82 76 67 Income taxes payable Total current liabilities Bonds payable 451 376 202 176 Total liabilities 653 552 167 206 124 98 Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 291 304 $ 944 $ 856Explanation / Answer
Answer:
1
Using the indirect method, determine the net cash provided by/used by operating activities
Net cash flow provided by operating activity
118
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2
GROTON COMPANY
Statement of cash flow (indirect method)
For the year ended Dec 31, 2011
Amount $
Amount $
Cash Flows from operating activities
Operating Activities
Net Income
65
Adjustments to reconcile net income:
Depreciation (87+10-73)
24
Gain on sale of investments
-6
Loss on sale of equipments
3
changes in Working capital
Increase in accounts receivable(233-314)
-81
Decrease in Inventories (202-162)
40
Increase in Prepaid exp (12-10)
-2
Increase in accounts payable(303-227)
76
Decrease in Accrued liability(72-82)
-10
Increase in Income tax payable(76-67)
9
53
Net Cash provided (used) by operating activities
118
Net Cash provided by Investing activities
Sale of equipment
18
Purchase of equipment (513+31-434)
-110
Proceeds from sale of long-term investments
15
Net Cash provided by Investing activities
-77
Net Cash provided by Financing activities
Sell of bonds payable (202-176)
26
Purchase of common stock
-39
Dividend paid (124-98-65)
-39
Net Cash provided by Financing activities
-52
net cash flow of the year
-11
Add: opening cash balance
14
Closing cash balance
3
Net cash flow provided by operating activity
118