Need help with cash flow statement. Following are line items included in the 200

ID: 2505059 • Letter: N

Question

Need help with cash flow statement.

Following are line items included in the 2009 statement of cash flow prepared by the Nine Muses, Inc. (amounts are in thousands)

Proceeds from sale of long term investment $14,077

Depreciation expense 8,275

Increase in accounts receivable 2,396

Increase in accounts payable 6,590

Purchase of long term investments 29,939

Net income 22,214

Increase in accrued salaries 4,072

Proceeds from sale of property and equipment 2,468

Increase in inventories 7,320

Issuance of long term notes 126

Reductions of long term debt 572

Gain on disposal of long term assets 415

Issuance of common stock 10,000

Cash and cash equivalents, beginning of the year 21,750

Increase in income taxes payable 5,608

Acquisitions of property and equipment 31,083

Net increase (decrease) in cash and cash equivalent ?

Cash and cash equivalent, end of year ?

Required:

Prepare The Nine Muses' statement of cash flows using the indirect method.

Explanation / Answer

CASH FLOW STAEMENT using the Indirect Method:-

Cash flow from OPERATING ACTIVITIES:-

Amount(in thousands)

Net income

22,214

Add:- Depreciation expense

8,275

Less:- Gain on disposal of long term assets

(415)

Less:- Increase in inventories

(7,320)

Less:-Increase in accounts receivable

(2,396)

Add:- Increase in accounts payable

6,590

Add:- Increase in accrued salaries

4,072

Add:- Increase in income taxes payable

5,608

Net cash inflow from OPERATING ACTIVITIES

36628

Cash flow from INVESTING ACTIVITIES:-

Proceeds from sale of long term investment

14,077

Purchase of long term investments

(29939)

Proceeds from sale of property and equipment

2,468

Acquisitions of property and equipment

(31,083)

Net cash outflow from INVESTING ACTIVITIES

(44477)

Cash flow from FINANCING ACTIVITIES:-

Issuance of long term notes

126

Reductions of long term debt

(572)

Issuance of common stock

(10000)

Net cash outflow from FINANCING ACTIVITIES

(10446)

Net increase (decrease) in cash and cash equivalent

(18295)

Add:- Cash and cash equivalents, beginning of the year

21,750

Cash and cash equivalent, end of year

3455