Question

PROBLEM 5 (VALOR 15 PUNTOS) Jumpin' Jim Company, a merchandiser, recently completed its calendar year 2008 operations. For the year, (1) all sales are credit sales, (2) all credits to accounts receivable reflect cash receipts from customers. (3) purchases of inventory are on credit, (4) all debits to accounts payable reflect cash payments for inventory, and (5) other expenses are paid in advance and are initially debited to Prepaid Expenses. Jumpin' Jim's balance sheet and income statement follow: JUMPIN' JIM COMPANY Income Statement For Year Ended December 31, 2008 Sales $630,700 Cost of goods sold (278.000 Gross profit 352,700 Operating expenses Depreciation expense $15,620 Other expenses 189.000 (204.620) Other gains (losses) Gain on sale of equipment 10.200 Income before taxes S158,280 Income taxes 127.570) Net income $130.710 250 JUMPIN' JIM COMPANY Comparative Balance Sheets December 31, 2008 2007 Assets Cash $ 54,400 Accounts receivable $ 62,900 70,250 Merchandise inventory 55,500 210,800 204,800 Prepaid expenses 1,560 Equipment 102,580 88,000 Accum. depreciation - Equip. (25.020) (24.200) Total assets $413,260 $388,560 Liabilities and Equity Accounts payable $ 41,090 $ 98,100 Short-term notes payable 5,000 -0- Long-term notes payable 26,000 40,000 Common stock, S2 par value 122,000 120,000 Contributed capital in excess of par, common stock 70,500 67,500 Retained earnings 148.670 62.960 Total liabilities and equity $413,260 $388,560

Answer 1

Answer-

JUMPIN' JIM COMPANY
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED 31,2008
Particulars		Amount
		$
Cash flow from operating activities
Net Income		130710
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation expenses		15620
Gain on sale of equipment		-10200
Change in operating assets & liabilities
Increase in accounts receivable		-14750
Increase in inventory		-6000
Decrease in prepaid expenses		1310
Decrease in accounts payable		-57010
Net cash flow from operating activities (a)		59680
Cash Flow from Investing activities
New equipment purchased		-10000
Equipment sold		16820
Net cash Flow from Investing activities (b)		6820
Cash Flow from Financing activities
Cash dividends paid		-45000
Common stock issued		5000
Short term note issued		5000
Long term notes paid		-40000
Net cash Flow from Financing activities (c)		-75000
Net Change in cash c=a+b+c		-8500
Beginning cash balance		62900
Closing cash balance		54400
Schedule of non cash investing & financing activities
Issuance of long term note for equipment	($36000-$10000)	26000