Question

ARCTIC COMPAY Income Statement For the Tear tnded December 31, 2013 Sales evenue S0000 Cest of Goods Sold 587400 Wges Expense 209.000 Advertiong xperoe 34100 Deprecation Expere ntwpense 24200 1900 Gain on Sale ef Land 27500 47000 t O0 ARCTIC COMPANY Balance Sheets Dec 31, 2013 Dec. 31, 2012 Assets Cash $30800 55000 Accourts Receable 4200 inentory Prepd Advetsn 134 300 112300 plant Ats 244200 Accumulted Deoreoaon Totl Aets $53000 $40700 Liabilties and Sockhelders touty Accounts Payale s4100 intert Payable 6000 onds Payable Common Stock 209 300 2.00 etaned taming treasury Stock 00 M3400 $40000 Total Liablities and Stockldes touty 000 During 2013, Arctc sold land for $77/000 cash that nad orignaly cost $49500 Arctic aso purchased equipment for cash, acquired treasury stock for cash and ssued bonds payable for cash Accounts payable relate to merchandse purchases aoddng

Answer 1

A Cash flow statement provides the following information:
1) Information about company's cash receipt and cash payment during an accounting period.
2) Information about company's operating, investing and financing activities.
3) Information access the company's liquidity, solvency and financing flexibility.
Under the indirect method, net income is converted operating cash flow by making adjustments for the transaction that effect net income but are non cash transactions. The adjustment includes eliminating non cash expenses, non operating items and the changes in the balance sheet account on account of accrual accounting events.

Cash flow from operating activities (CFO), consists of the inflows and outflows of cash resulting from revenue and expense transactions that affect a firm's net income.

Cash flow from investing activities (CFI) consists of the inflow and outflows of cash resulting from the acquisition of long term assets and investment.

Cash Flow from financing activities (CFF) consists of the inflow and outflows of cash resulting from transactions affecting a firm's capital structure.

Ans a Change in Cash during 2013 $23,100 Increase Ans b Amount (546,200) Artic Company Statement of Cash Flows For year ended December 31, 2013 Particulars Amount Cash Flow from Operating Activities Net Loss Add (deduct) non cash effects on operating Depreciation $24,200 Gain on sale of land ($27,500) Decrease in Accounts receivable $8,800 Decrease in Inventory $6,600 Decreae in Prepaid Advertising $3,300 Decrease in Accounts Payable ($15,400) Increase in Interest Payable $6,600 Cash Flow used by Operating Activities Cash Flow from Investing Activities Sale of Land $77,000 Purchase of Plant Assets ($201,300) Cash used by Investing Activities Cash Flow from Financing Activities Issuance of Bond payable $220,000 Purchase of Treasury Stock ($33,000) Cash provided by Financing Activity Net Change in cash Cash At beginning of the year Cash at End of Year $6,600 ($39,600) ($124,300) $187,000 $23,100 $30,800 $53,900

Working Increase Particulars Closing Balance Opening Balance I/(Decrease) Assets (A) (B) (A) - (B) Accounts Receivable $46,200 $55,000 $8,800) inventory $117,700 $124,300 ($6,600) Prepaid Advertising $11,000 $14,300 ($3,300) Accounts Payable $18,700 $34,100 ($15,400) Interest Payable $6,600 $0 $6,600 Increase in Assets is Cash Outflow and Decrease in Assets in Cash Inflow Increase in Liability is Cash Inflow and Decrease in Liability in Cash Outflow 2 Beginning Plant Assets $244,200 Less: Cost of Land sold ($49,500) Less: Ending Plant Assets ($396,000) Plant Assets Purchased ($ 201,300)