Question

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Exercise 12-5 The following information is available for Sweet Acacia Industries for the year ended December 31, 2017 Beginning cash balance Accounts payable decrease Depreciation expense Accounts receivable increase Inventory increase Net income Cash received for sale of land at book value Cash dividends paid Income taxes payable increase Cash used to purchase building Cash used to purchase treasury stock Cash received from issuing bonds 48,510 3,989 174,636 8,840 11,858 306,260 37,730 12,936 5,067 311,542 28,028 215,600 Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) Sweet Acacia Industries Statement of Cash Flows-Indirect Method Adjustments to reconcile net income to

Answer 1

Sweet Acacia Industries
STATEMENTS OF CASH FLOWS – INDIRECT METHOD
	$	$
CASH FLOW FROM OPERATING ACTIVITIES
Net Income	3,06,260.00
Adjustment to reconcile net income to:
Depreciation expense	1,74,636.00
Increase in Accounts receivable	(8,840.00)
Increase in inventory	(11,858.00)
Decrease in Accounts payable	(3,989.00)
Increase in Income Taxes payable	5,067.00
NET CASH FROM OPERATING ACTIVITIES (A)		4,61,276.00
CASH FLOW FROM INVESTING ACTIVITIES
Cash received for sale of land at book value	37,730.00
Cash used to purchasing building	(3,11,542.00)
NET CASH FROM INVESTING ACTIVITIES (B)		(2,73,812.00)
CASH FLOW FROM FINANCING ACTIVITIES
Cash dividends paid	(12,936.00)
Cash used to purchase treasury stock	(28,028.00)
Cash received from issuing bonds	2,15,600.00
NET CASH FROM FINANCING ACTIVITIES (C)		1,74,636.00
NET CHANGES IN CASH AND CASH EQUIVALENTS (A+B+C)		3,62,100.00
ADD: OPENING CASH AND CASH EQUIVALENTS		48,510.00
CLOSING CASH AND CASH EQUIVALENTS		4,10,610.00