Question

584 13 Statement of Cash Flows (480,0000 Cash flows from investing activities Sale of equipment Purchase of equipment Net cash used by investing activities Cash flows from financing activities Payment of cash dividende Net Increase in cash Cash at beginning of period Cash end of period (200,000) Prepare almeno flowing directed LO4) 2. The income statement for Kosinski Manufacturing Company contains the following condensed information KOSINSKI MANUFACTURING COMPANY Income Statement For the Year Ended December 31, 2017 $6,583.000 $4.920,000 880.000 Sales revenue Operating expenses, excluding depreciation Depreciation expense Income before income taxes Income tax expense Net income 5.800.000 783.000 353,000 $430,000 Included in operating expenses is a $24,000 loss resulting from the sale of equipment for $270,000 cash. Equipment was purchased at a cost of $750,000. The following balances are reported on Kosinslo's comparative balance sheet at December 31. KOSINSKI MANUFACTURING COMPANY Comparative Balance Sheets (partial) Cash Accounts receivable Inventory Accounts payable 2017 $672.000 775,000 834,000 521,000 2016 $130,000 610,000 867,000 501,000 . Income tax expense of $353,000 represents the amount paid in 2017. Dividends declared and paid in 2017 totaled $200,000 Instructions Prepare the statement of cash flows using the direct method. Solution KOSINSKI MANUFACTURING COMPANY Statement of Cash Flows Direct Method For the Year Ended December 31, 2017 $6,418,000 Cash flows from operating activities Cash collections from customers - Cash payments: For operating expenses For income tates Net cash provided by operating activities $4.843,000 153.00 5,196,000 1,222.000

Answer 1

Answer is given below with all working

Cash Flow Statement under Direct method Cash flows from Operating Activities Amount A Cash received from customers $6,418,000 B Cash paid to suppliers and Operating Expenses ($4,843,000 Cash paid for income taxes ($353,000) Net Cash provided by Operating Activities $1,222,000 Cash flows from Investing Activities New Equipment purchase ($750,000) Sale proceeds of equipment $270,000 Net Cash provided by Investing Activities ($480,000) Cash flows from Financing Activities Dividends paid ($200,000) Net Cash provided by Financing Activities ($200,000) Net Cash inflow/outflow) $542,000 Opening balance of cash $130,000 Closing balance of cash $672,000 Working notes: A Cash received from customers Sales Less : Increase in Accounts receivable Net cash received from customers $6,583,000 $165,000 $6,418,000 Cash paid to suppliers and Operating expenses Operating Expenses Less: Decrease in inventory cost of purchase $4,896,000 $33,000 $4,863,000 cost of purchase Less : Increase in payable Net payment to suppliers $4,863,000 $20,000 $4,843,000