Question

Question 01: Following is the comparative balance sheet of the XYZ co. as on 31^st Dec 2017:

	2017	2016
Cash & Cash equivalents	88200	22500
Account Receivables	14400	21700
Inventories	63600	60400
Account Payables	28600	27100
Accrued liabilities	10600	11200

Transactions during the year:

1. Payment of dividend……………………17200
2. Purchase of equipment ………….54400
3. Issuance of long term note payable to borrow cash………….50000
4. Depreciation…………….16700
5. Purchase of building………………………100000
6. Net income……………………….59600
7. Issuance of common stock for cash…………106000

You are required to prepare the statement of cash flows using indirect method.

Answer 1

Sol:

XYZ & Co.

Statement of Cash Flows

For the year ended 31st December, 2017

Cash Flow from operating activities :
	Net Income	59600
	Adjustments to reconcile net income to net cash provided by operating activities :
	Depreciation on fixed Assets	16700
	(Increase) decrease in current assets:
	Accounts Receivables	7300
	Inventory	-3200
	Prepaid expenses
	Increase (decrease) in current liabilities:
	Accounts Payable	1500
	Accrue expenses	-600
Net Cash Provided by operating activities -(a)		81300
Cash Flow from investing activities :
	Purchase of equipment	-54400
	Purchase of Building	-100000
Net Cash used in investing activities -(b)		-154400
Cash Flow from Financing activities :
	Issuance of long term note payable to borrow cash	50000
	Issuance of common stock for cash	106000
	Payment of dividend	-17200
Net Cash (used) provided in Financing activities -( C )		138800
Net Increase (Decrease) in cash- (a+b+c)		65700
Add :	Beginning Cash Balance	22500
	Ending Cash Balance	88200