Question

Sing Imports Corp. reports the following amounts on its statement of cash flows:

	20X2		20X1
Trade accounts payable	$	525,500	$	723,600
Dividends payable		11,600		33,000
Provision for litigation		370,000		180,000
Decommissioning obligation		130,300		122,000
Note payable, 4%		480,000		760,000
Note payable, net, 5%		71,300		65,300

Other information:

• Dividends of $132,000 were declared and paid during the year.
  
• The provision for litigation is based on outstanding legal claims. The amount is not discounted because of uncertainty of cash flow amounts and timing. The provision was increased this year because of new lawsuits filed against the company.
  
• The decommissioning obligation relates to a leased premises that must be remediated at the end of the lease term. The change in this account this year is due to unwinding the discount.
  
• The 4% note payable is a bank loan at market interest rates. Interest of $30,400 was paid at year-end.
  
• The 5% note payable reflects market interest rates at issuance but is, in fact, a no-interest, multi-year liability associated with inventory purchase. The change in the account relates to unwinding the discount.

Sing uses the indirect method of presentation in the operating activities section of the statement of cash flows and follows the policy of reporting dividends paid in financing activities; interest paid is included in operating activities.

Required:

List the items as they would appear on the statement of cash flows in 20X2. Include the classification and amount.

Answer 1

Operating activity	Amount in $
Less- Decrease in trade accounts payble (723,600-525,50)	198,100
Less-Interest paid during the year	30,400
Less-Decrease in 4% note payble (760,000-480,000)	280,000
Investing activity
Financing activity
Less-outflow of cash by patment of dividend(33,000-11,600+132,000)	153,400