Question

LAG Network Inc.'s balance sheet and income statement are as follows: LAG Network Inc. Income Statement For Year Ended December 31, 2017 Sales Cost of goods sold $937,600 565.200 $372,400 Gross profit Operating expenses: Depreciation expense Other expenses $ 25,200 249.800 Total operating expenses 275,000 Profit from operations Income taxes 27,600 Profit LAG Network Inc. Comparative Balance Sheet Information December 31 Assets 2017 2016 Cash $ 81,280 $ 56.200 Accounts receivable 51.400 39.400 Merchandise inventory 272.120 200.400 163.400 140.200 Equipment Accumulated depreciation (50 800) (55.600) $487.400 $440 600 Total assets $ 52.800 Liabilities and Equity Accounts payable Income taxes payable Common shares Retained earnings $ 40,200 20.000 372 000 54.600 324.000 44.600 5487 400 5440,000 it Total abilities and

Answer 1

Solution:

Lag Network Inc.
Statement of Cash Flows
For the Year ended December 31, 2017
Particulars	Details	Amount
Cash Flow from Operating Activities:
Net Income	$69,800
Adjustments to reconcile net income to cash flow from operating activities:
Depreciation	$25,200
Increase in Accounts Receivables ($39400 - $51400)	-$12,000
Increase in Inventory ($260400 -$272120)	-$11,720
Decrease in Accounts payable ($40200-52800)	-$12,600
Increase In Income tax Payable ($20600-19200)	$1,400
Net Cash Flow From Operating Activities (A)		$60,080
Cash Flow from Investing Activities:
Purchase of Equipment	-$23,200
Net Cash Flow From Investing Activities (B)		-$23,200
Cash Flow from Financing Activities:
Issue of Common shares (19200*$2.50)	$48,000
Dividend paid	-$59,800
Net Cash Flow From Financing Activities (C)		-$11,800
Total Cash flow from all activities (A+B+C)		$25,080
Cash at the beginning of the year		$56,200
Cash at the end of year		$81,280