Prepare a statement of cash flows using the indirect method. (please show all wo
ID: 2528966 • Letter: P
Question
Prepare a statement of cash flows using the indirect method. (please show all work/ calculations)
2017
2016
Assets:
Cash
200,000
70,000
Accounts receivable, net
87,000
65,000
Inventory
55,000
60,000
Property, plant & equipment
700,000
600,000
Accumulated depreciation
(100,000)
(60,000)
Total Assets
942,000
735,000
Liabilities & Equity
Accounts payable
45,000
40,000
Accrued liabilities
46,000
40,000
Common stock
460,000
460,000
Retained earnings
391,000
195,000
942,000
735,000
Sales
1,200,000
Cost of goods sold
650,000
Gross profit
550,000
Operating expenses
180,000
Pre-tax income
370,000
Income taxes
74,000
Net income
296,000
2017
2016
Assets:
Cash
200,000
70,000
Accounts receivable, net
87,000
65,000
Inventory
55,000
60,000
Property, plant & equipment
700,000
600,000
Accumulated depreciation
(100,000)
(60,000)
Total Assets
942,000
735,000
Liabilities & Equity
Accounts payable
45,000
40,000
Accrued liabilities
46,000
40,000
Common stock
460,000
460,000
Retained earnings
391,000
195,000
942,000
735,000
Sales
1,200,000
Cost of goods sold
650,000
Gross profit
550,000
Operating expenses
180,000
Pre-tax income
370,000
Income taxes
74,000
Net income
296,000
Explanation / Answer
NASH CORPORATION Statement of Cashflows For the year Ended December 31, 2017 Cash flows from operating activities Net Income $ 296,000 Adjustments to reconcile net income to : Depreciation expense $ 40,000 100000-60000 Increase in accounts receivable $ (22,000) 65000-87000 Decrease in inventory $ 5,000 60000-55000 Increase in accounts payable $ 5,000 45000-40000 Increase in accrued liabilities $ 6,000 46000-40000 $ 34,000 Net cash flow from operating activities $ 330,000 Cash flows from investing activities Cash paid for Purchase of equipment $ (100,000) 600000-700000 Net cash used for investing activities $ (100,000) Cash flows from financing activities Cash paid for dividend $ (100,000) 391000-195000-296000 Net cash flow used by financing activities $ (100,000) Net increase in cash and cash equivalents $ 130,000 Cash and cash equivalents at beginning of period $ 70,000 Cash and cash equivalents at end of period $ 200,000