In Closs Example 2 STATEMENT OF CASH FLOWS- Indirect method and comparative bala
ID: 2531073 • Letter: I
Question
In Closs Example 2 STATEMENT OF CASH FLOWS- Indirect method and comparative balance sheets are as tollows statement frr the year For the Year Ended unn 30, 2017 Sales revenue Cost of goods sold s 550.000 350000 200.000 Gross protit Ceneral and admnistrative expenses s 55,000 75,000 Loss on sale of piant assets Tota expenses and losses Interest Income tax expense Income before interest and taxes Income before taves Nat income 1350 65,000 15.000 $ 50,000 17.000 33,002 expense une 30 2017 2016 Cash Accounts receivable Inventory Prepaid rent 31,00040,000 90,000 80,000 12,000 160OD 213.000 £226.000 95,000 Total current assets Land Plant and equipment Accumulated depreciation $ 250,000 170,000 600,000 750,000 310,000) 250.000) 690,000 520,000 £203 000 746,000 Total long-term assets Total assets $155,000 148,000 Accounts payable Other accrued liabilities Income taxes payable 32,000 8,000 10,00 26,000 $195.000 184,000 Total current liabilities Long-term bank loan payable Common stock Retained earnings 100.000$130,009 $350,000 200,000 258,000232000 608,000 $432,000 $903,000 Total stockholders' equity Total liabilities and stockholders' equity $746,000 Dividends of $7,000 were declared and paid during the year. New plant assets were purchased during the r for $195,000 in cash. Also, land was purchased for cash. Plant assets were sold during the year for $25,000 in cash. The original cost of the assets sold was $45,000, and their book value was $30,000. Additional stock was issued for cash, and a portion of the bank loan was repaid. REQUIRED: Compute the Statement of Cash Flows using the indirect method.Explanation / Answer
Statement showing Cashflows for the year ending June30, 2017 Details Amount $ Cash flows from Operating Activities: Net Income during the year 33,000 Adjustment to be made for reconciling net income to cashflows Depreciation Expense 75,000 Lloss on sale of plant 5,000 Interest expense 15,000 Increase in Accounts receivable -15,000 Decrease in Inventory 15,000 Decrease in prepaidd rent 4,000 Increase in Accounts Payable 7,000 Increasse in other Accrued liabilities 6,000 Decrease in taxes payable -2,000 Net Cash provided from Operating Activities 143,000 Cash flows from Investing Activities: Land purchassed -80,000 Purchase of plant -195,000 Sale of plant 25,000 Net cash used in Investing Activities -250,000 Cashflows from Financing Activities: Dividend paid -7,000 Interest expense paid -15,000 bank loan repaid -30,000 Issue of common Stock 150,000 Net cash provided frm Financing activities 98,000 Net Cash Decrease during the year -9,000 Add: Beginning balance of Cash and Cash equivalents 40,000 Ending Balance of Cash and cash equivalents 31,000