ICE Drilling Inc.’s balance sheet information and income statement are as follow
ID: 2529088 • Letter: I
Question
ICE Drilling Inc.’s balance sheet information and income statement are as follows:
Additional information regarding ICE Drilling’s activities during 2017:
1. Loss on sale of equipment is $13,480.
2. Paid $72,280 to reduce a long-term note payable.
3. Equipment costing $115,000, with accumulated depreciation of $73,000, is sold for cash.
4. Equipment costing $217,880 is purchased by paying cash of $58,000 and signing a long-term note payable for the balance.
5. Borrowed $8,400 by signing a short-term note payable.
6. Issued 10,080 common shares for cash at $10 per share.
7. Declared and paid cash dividends of $141,160.
Required:
Prepare a statement of cash flows for 2017 that reports the cash inflows and outflows from operating activities according to the indirect method. (List any deduction in cash and cash outflows as negative amounts.)
Gross profit $ 543,600 Operating expenses: Depreciation expense $ 52,000 Other expenses 307,760
Total operating expenses 359,760 Profit from operations 183,840 Loss on sale of equipment 13,480
Profit before taxes $ 170,360 Income taxes 29,160
Profit $ 141,200
Explanation / Answer
Answer:-
ICE DRILLING INC. Statement of Cash Flow (Using Indirect Method) For the year ended December 31, 2017 Particulars Amount $ Cash flow from opreating activities Net Income 141200 Adjustments to reconcile net income to net cash provided by opreating activities Adjustment for non cash effects Depreciation 52000 Loss on sale on equipment 13480 Change in opreating assets & liabilities Increase in accounts receivable -34440 Increase in inventory -47600 Decrease in prepaid expenses 11860 Decrease in accounts payable -53740 Net cash flow from opreating activities (a) 82760