Brecker Inc., a greeting card company, had the following statements prepared as
ID: 2497112 • Letter: B
Question
Brecker Inc., a greeting card company, had the following statements prepared as of December 31, 2014. Additional information: Dividends in the amount of $5,708 were declared and paid during 2014. Depreciation expense and amortization expense are included in operating expenses. No unrealized gains or losses have occurred on the investments during the year. Equipment that had a cost of $31,280 and was 70% depreciated was sold during 2014. Prepare a statement of cash flows using the direct method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)Explanation / Answer
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Particulars Amount($) Amount($) Cash flow from Operating Activities Net Income 30,529 Add:-Depreciation(34,853+21,896-24,879) 31,870 Add:-Amortization (50,157-45,951) 4,206 Less:-Gain on sale of Equipment (1,805) Add:-Interest Expense 11,422 Add:-Income tax Expense 6758 Adjustment for Working Capital Changes(Refer Table below) 14,054 Less:-Taxes Paid during the year(6041+6758-3811) (8988) 88,046 Cash Flow from Investing Activities Sale of equipment(31280*30% + 1805) 11,189 Investment in Short Term Investments (AFS) (16,922) Purchase Of Equipment (153,920+31,280-126,270) (58,930) (64,663) Cash Flow FInancing Activities Interest Expense (11,422) Dividend paid (5,708) Repayment of Short Term Loans (1,963) Repayment of Long Term Loans (7,134) (26,227) Net Cash OUTFLOW during the year (2,844) Add:-Opening Cash Balance 8,829 Closing CAsh Balance (Tallied) 5,985