Question

Condensed financial data of Splish Brothers Inc. follow.

Splish Brothers Inc. Comparative Balance Sheets December 31
Assets		2022			2021
Cash		$ 218,160			$ 130,680
Accounts receivable		237,060			102,600
Inventory		303,750			277,695
Prepaid expenses		76,680			70,200
Long-term investments		372,600			294,300
Plant assets		769,500			654,750
Accumulated depreciation		(135,000	)		(140,400	)
Total		$1,842,750			$1,389,825
Liabilities and Stockholders’ Equity
Accounts payable		$ 275,400			$ 181,710
Accrued expenses payable		44,550			56,700
Bonds payable		297,000			394,200
Common stock		594,000			472,500
Retained earnings		631,800			284,715
Total		$1,842,750			$1,389,825

Splish Brothers Inc. Income Statement Data For the Year Ended December 31, 2022
Sales revenue				$1,048,842
Less:
Cost of goods sold		$365,742
Operating expenses, excluding depreciation		33,507
Depreciation expense		125,550
Income tax expense		73,656
Interest expense		12,771
Loss on disposal of plant assets		20,250		631,476
Net income				$ 417,366

Additional information:

1.		New plant assets costing $270,000 were purchased for cash during the year.
2.		Old plant assets having an original cost of $155,250 and accumulated depreciation of $130,950 were sold for $4,050 cash.
3.		Bonds payable matured and were paid off at face value for cash.
4.		A cash dividend of $70,281 was declared and paid during the year.

Prepare a statement of cash flows using the indirect method.

Answer 1

Answer-

SPLISH BROTHER INC.
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED DECEMBER 31,2022
Particulars		Amount
		$
Cash flow from operating activities
Net Income		417366
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation		125550
Loss on sale of plant assets		20250
Change in operating assets & liabilities
Increase in accounts receivable		-134460
Increase in inventory		-26055
Increase in prepaid expenses		-6480
Increase in accounts payable		93690
Decrease in accrued expenses payable		-12150
Net cash flow from operating activities (a)		477711
Cash Flow from Investing activities
Investment purchased		-78300
New plant purchased		-270000
Old plant assets sold		4050
Net cash Flow from Investing activities (b)		-344250
Cash Flow from Financing activities
Cash dividends paid		-70281
Bonds paid		-97200
Common stock issued		121500
Net cash Flow from Financing activities (c)		-45981
Net Change in cash c=a+b+c		87480
Beginning cash balance		130680
Closing cash balance		218160