Presented below is the 2018 income statement and comparative balance sheet infor

Question

Presented below is the 2018 income statement and comparative balance sheet information for Tiger Enterprises.

Required:
Prepare Tiger’s statement of cash flows, using the indirect method to present cash flows from operating activities. (Hint: You will have to calculate dividend payments). (Enter your answers in thousands. Amounts to be deducted should be indicated with a minus sign.)

TIGER ENTERPRISES Income Statement For the Year Ended December 31, 2018 ($ in thousands) Sales revenue $ 13,000 Operating expenses: Cost of goods sold $ 4,600 Depreciation 360 Insurance 700 Administrative and other 3,000 Total operating expenses 8,660 Income before income taxes 4,340 Income tax expense 1,736 Net income $ 2,604 Balance Sheet Information ($ in thousands) Dec. 31,2018 Dec. 31, 2017 Assets: Cash $ 540 $ 320 Accounts receivable 810 950 Inventory 750 720 Prepaid insurance 170 80 Plant and equipment 3,300 2,400 Less: Accumulated depreciation (1,080 ) (720 ) Total assets $ 4,490 $ 3,750 Liabilities and Shareholders' Equity: Accounts payable $ 360 $ 480 Payables for administrative and other expenses 360 520 Income taxes payable 290 270 Note payable (due 12/31/2019) 1,300 950 Common stock 1,020 920 Retained earnings 1,160 610 Total liabilities and shareholders' equity $ 4,490 $ 3,750

Explanation / Answer

Solution :

Tiger Enterprises Statement of Cash Flows (Indirect Method) For year ended December 31, 2018 Particulars Details Amount Cash Flow from Operating Activities: Net Income $2,604.00 Adjustments to reconcile net income to net cash provided by operations: Depreciation Expense $360.00 Decrease in accounts receivables ($950 - $810) $140.00 Increase in inventory ($750 - $720) -$30.00 Increase in prepaid insurance ($170 - $80) -$90.00 Decrease in accounts payable ($480 - $360) -$120.00 Decrease in payable for administrative and other expenses ($520 - $360) -$160.00 Increase in income tax payable ($290 - $270) $20.00 Net Cash provided by operating activities $2,724.00 Cash Flow from Investing Activities: Purchase of Equipment ($3,300 - $2,400) -$900.00 Net Cash Provided by Investing activities -$900.00 Cash Flow from Financing Activities: Proceed from issue of note ($1,300 - $950) $350.00 Proceed from issue of common stock ($1,020 - $920) $100.00 Dividend Paid ($610 + $2,604 - $1,160) -$2,054.00 Net Cash Provided by financing activities -$1,604.00 Net Increase / (Decrease) in Cash $220.00 Cash balance at beginning of year $320.00 Cash balance at end of year $540.00

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