Prepare Statement of Cash Flows Brown Company Use the following information to:
ID: 2461202 • Letter: P
Question
Prepare Statement of Cash Flows Brown Company
Use the following information to:
A.) Prepare the Statement of Cash Flows for Brown Company using the indirect method
B.) Analyze the results by commenting as we did on homework.
Brown Company
Income Statement
For the Year Ended December 31, 2014
Revenues $6,500
Depreciation expense $ 800
Other operating expenses * 4,900 5,700
Income before income taxes $ 800
Income tax expense 350
Net income $ 450
*Includes an $800 Gain on Sale of Plant & Equipment
Brown Company
Balance Sheet
December 31, 2014 and 2013
2014 2013
Assets:
Cash $ 650 $ 130
A/R 770 610
Inventories 835 870
Net Plant & Equip. 1,450 1,770
Total Assets $3,705 $3,380
Liabilities:
A/P $ 520 $ 500
LT debt 375 320
Common Stock 1,260 1,260
Retained Earnings 1,550 1,300
Total Liab. & SE $3,705 $3,380
Explanation / Answer
Statement of Cash Flows for the year ended 12/31x1 Cash flows from operating activities Net income $450 Adjustments for: Depreciation and amortization $800 Gain on sale of Plant & Equipment -$800 $0 Increase in Accounts receivables ($610 -770) -$160 Decrease in inventories(870-835) $35 Increase in Accounts payables (520 -500) $20 -$105 Cash generated from operations $345 Cash flows from investing activities Proceeds from sale of equipment (1770-1450) $320 Net cash used in investing activities $320 Cash flows from financing activities Dividend Paid ($1300 (Beg. RE + $450(NI) - $1550(End. RE)) -$200 Proceeds from issuance of long-term debt (375-320) $55 Net cash used in financing activities -$145 Net increase in cash and cash equivalents $520 Cash and cash equivalents at beginning of period $130 Cash and cash equivalents at end of period $650