Question

The following are financial statements for Fantastic Floss, Inc. for the current year. Also included is a balance sheet for the prior year. Fantastic Floss Income Statement Current Year Revenue (sales) $ 120,000 Cost of Goods Sold 70,000 Gross Profit 50,000 Rent Expense 5,000 Wages Expense 20,000 Depreciation Expense 15,000 Net income $ 10,000

Create a cash flow statement

Answer 1

Amount $ 10,000 Fantastic Floss Statements of Cash Flows - Indirect Method Particulars Amount Operating activities: Net Income Adjustments to convert net income to a cash basis: Add: Depreciation expense $ 15,000 Less: Increase in Accounts Receivable $ (4,100) Increase in Inventory $ (5,500) Decrease in Accounts Payable $ (2,500) Decrease in Taxes Payable $ (1,400) ($ 25,300 - $ 29,400) ($ 30,100 - $ 35,600) ($ 11,200 - $ 13,700) ($ 800 - $ 2,200) $ $ 1,500 11,500 Net Cash flow provided by Operating activities Investment activities: Cash paid for purchase of Factory MAchines (refer note) Cash paid for purchase of Computer (refer note) Net Cash used in Investing activities $ $ (5,000) (2,100) $ (7,100) Financing activities: Cash received from issue of common stock Cash paid to discharge Long-term Bonds payable Cash dividends paid Net Cash flow from financing activities $ $ $ 10,000 (8,000) (3,000) ($ 30,000 - $ 20,000) ($ 42,000 - $50,000) $ (1,000) Net decrease in cash and cash equivalents Cash and cash equivalents at January 1 Cash and cash equivalents at December 31 $ $ $ 3,400 8,900 12,300

Cash paid for purchase of Factory Machines Factory Machines ending, net $ Add: Depreciation $ $ Less: Factory Machines beginning, net $ Purchase of Factory Machines $ 25,500 10,000 35,500 30,500 5,000 Cash paid for purchase of Computer Computer ending, net Add: Depreciation $ $ $ $ $ 8,200 5,000 13,200 11,100 2,100 Less: Computer beginning, net Purchase of Computer