Question

Roundtree Inc. had the following condensed Statement of Financial PUSH 2015: Roundtree Inc. Statement of Financial Position December 31, 2015 $30,000 41,000 Cash Accounts Receivable Investments - Fair Value Net Income Property, Plant & Equipment (net) Land $20,000 21,200 81,000 40,000 S194.200 Accounts Payable Bonds Payable Common Shares Retained Earnings 100,000 23,200 $194,200 During 2016, the following occurred: Aero liquidated its investment portfolio for $5.000. 2. A parcel of land was purchased for $38,000. 3. Common shares were issued for $30,000. Dividends totaling $10,000 were declared and paid to shareholders. Net income for 2016 was $35,000, including $12,000 in depreciation expense. Land was purchased through the issuance of $30,000 in additional bonds. At December 31, 2016, the balances in the Cash, Accounts Receivable, and Accounts Payable accounts were $70,200, $42,000, and $40,000, respectively. 8. The fair value of the investments is equal to their cost. Required: Using the indirect method, prepare in good form a Statement of Cash Flows for Roundtree Inc. for the year ended December 31, 2016. Assume dividends paid are treated as a financing activity. NOTE: Show your completed Statement of Cash Flows on page 13 of this exam. Page 14 is to be used for any rough work calculations.

Answer 1

Cash flow statement for the year ended 31st December 2016

Particulars	Amount($)	Amount ($)
Net income		35,000
Add : non cash and non operating expenses
Depreciation	+12,000
Add/ Less : changes in working Capital
Increase in accounts payable	+10,000
Increase in accounts receivable	-20,800	1,200
Cash flow from operating activities		36,200
Cash flow from investing activity
Proceeds from liquidating investment	+5,000
Purchase of land (38,000-30,000)	-8,000
Cash flow from investing activity		-3,000
Cash flow from financing activity
Proceeds from issue of common shares	+30,000
Dividends paid	-10,000
Cash flow from financing activity		+20,000
Total cash flows during the year		53,200
Cash balance at the beginning of the year		20,000
Cash balance at the end of the year		73,200

Cash balance given in the question as on 31st December, 2016 is wrong