Question

PROBLEM 2-9 STATEMENT OF CASH FLOWS te for the Book Store are as follos INCOME STATEMENT 2013 5,000,000 4.500.000 500,000 Sau Chuo Be 300,000 200.000 500.000 (45, 000) 45000 Operating Expenses Deption Le sale of land Net loss BALANCE SHEET 2013 Cast 2012 100,000 25.000 150,000 100,000 (25,000) 100,000 450,000 2013 60,000 325,000 450,000 450,000 (225.000) Accounts Receivable Inventory Equipment Accumulated Depreciation Land Total Assets 1.060.000 100,000 Accounts Payable Long Term Bond Payable Total Liabilities 300,000 200,000 500.000 100.000 Common Stock Retained Earnings Total Stockholders 50,000 300,000 350.000 360,000 200,000 560.000 Total Liabilities + Stockholders Equity 450,000 1.060.000 Required: Prepare Statement of Cash Flows 168 Page

Answer 1

Amount $ (45,000) $ 245,000 $ 200,000 JHJ Book Store Statement of Cash Flows (Indirect Method) For the year ended December 31.2013 Cash flows from Operating Activities: Amount Net Loss Adjustments to reconcile net income to net cash provided by operating activities Income Statement items not effecting cash Depreciation $ 200,000 Loss on sale of land $ 45,000 Operating cashflow before changes in working capital Changes in Current Operating assets and liabilites Increase in Accounts Receivables $(300,000) Increase in inventory $(300,000) Decrease in Accounts payable $ 200,000 Net Cash used in operating activities Cash Flows from Investing Activities Cash received on sale of Land $ 55,000 Purchase of Equipment $(350,000) Net Cash used in Investting activities Cash Flows from Financing Activities Issue of Long term Bonds $ 200,000 Issue of Common Stock $ 310,000 Dividend paid S (55,000) Net Cash used in Financing activities Net Increase in Cash Cash balance at prior year end Cash balance at current year end $(400,000) $ (200,000) S(295,000) $ 455,000 $ (40,000) $ 100.000 $ 60.000

Note : In the given question, no where it was mentioned to prepare the cash flow statement under Direct method or Indirect method. Hence here statement of cash flows was prepared under Indirect method.

Working Notes: Satement of change in current assets & current liabilities (except cash & cash equivalents) Particulars Accounts Receivable Inventory Accounts Payable $ $ $ 2012 25,000 150,000 100,000 $ $ $ 2013 325,000 450,000 300,000 Change $300,000 $300,000 $ 200,000 Cash Received on Sale of Land Cost of Land Sold Less : Loss on sale of land Cash Received on sale of land $ $ $ 100,000 (45,000) 55,000 Cash paid for the Equipment purchased = $ 450000 - $ 100000 = $ 350000. Cash received from the issue of long term bonds = $ 200000 - $ 0 = $ 200000.

Dividend paid in cash Retained Earnings , Beginning Less : Net Loss Less : Retained Earnings, Ending Dividend $ $ $ $ 300,000 (45,000) 200,000) 55,000 Cash Received through the issue of Common Stock Cash received from issue of Common Stock = $360000 - $ 50000 = $ 310,000