Question

on 2 (Chapter 13) Homework HW Score: 1.88 3 of 5 (1 complete) ar Isle Travel Services, Inc., for December 31, 2017 and 2016, is as follows: ative balance sheet.) in the records of Fair Isle Travel Services, Inc. stion data.) he indirect method for preparing the statement of cash flows. Prepare the operating section of the statement of c ign for numbers to be subtracted or net cash outflow.) Transactions air Isle Tr ws-Opera e Year End a. Land was sold for $6,400. b. Equipment was purchased for cash. C. There were no disposals of equipment during the year d. The common stock was issued for cash. e. Net income for 2017 was $30.000 f. Cash dividends paid during the year were $7.000 ome to cash wable Print Done nce (5.000) 60000 2.000 any number in the input fields and then click Check Answer Check Answe

Prepare the statement of cash flows (indirect metbod) for fair isle travel services inc for 2017

Answer 1

Fair Isle Travel Services Inc.
Statement of Cash Flows
For the Year Ended December 31, 2017
Indirect Method Cash Flow	Amount in $	Amount in $
Cash Flows from Operating Activities
Profit before Taxation (Refer note 1)	47,000
Adjustments for :
Loss on Sale of land (Refer note 2)	3,500
Depreciation	7,000
Income Taxes Paid (Refer note 1)	-7,000
Interest Expense (Refer Note 3)	12,000
Decrease in Accounts Receivable	3,000
Increase in Inventory	-42,000
Decrease in Prepaid Insurance	10,000
Decrease in Accounts payable	-10,000
Increase in Wages payable	1,000
Net Cash from Operating activities		24,500
Cash Flows from Investing Activities
Proceeds from Sale of Land (Refer Note 2)	4,500
Purchase of Equipment	-23,000
Net Cash from Investing activities		-18,500
Cash Flows from Financing Activities
Proceeds from Issue of Common Stock	34,000
Dividends paid (Refer Note 1)	-6,000
Interest Paid (Refer Note 3)	-11,000
Proceeds from Notes Payable	9,000
Net Cash from Financing activities		26,000
Net Increase in Cash and Cash Equivalents		32,000
Cash and Cash equivalents at beginning of year		11,000
Cash and Cash equivalents at end of year		43,000

Note 1

A	Closing Balance of Retained Earnings	33,000
B	Opening Balance of Retained Earnings	-2,000
C	Dividend Paid	6,000
D	Net Income for 2017 (A+B+C)	37,000
E	Income Tax Payable as on 2017	10,000
	Profit before Taxation - (D+E)	47,000

Dividend paid is added to arrive at Profit before taxation and shown as Outflow in Financing Activities

Income Tax payable for 2017 is added to Net Income to arrive at profit before taxation. Income Tax as on 2016 is shown as outflow from Operating Activities

Note 2

A	Opening Balance of Land	1,18,000
B	Sale Proceeds - Inflow in Investing Activities	4,500
C	Closing Balance of Land	1,10,000
	Loss on Sale of land (A-B-C)	3,500

Note 3

Interest payable as on 2017 is added to Operating Activities and Interest payable as on 2016 is shown as outflow in Financing Activities