Question

Statement of Cash Flows -- Troubleshooting Homework Balance sheet End of Beginning year of year Change Cash 76,000 Accounts receivable 116,000 Inventory 88,000 Total current assets 280,000 Equipment, at cost 280,000 Less: Accum. depreciation (80,000) Net book value of equipment 200,000 Total assets 480,000 42.000 34.000 107,000 9,000 94,000 (6,000) 243,000' 37,000 210,000 70,000 (67,000) (13,000) 143,000 57,000 386,000 94,000 Why doesn't this balance? Please fix it. (There could be up to 5 mistakes.) Current Income statement year Sales 900,000 Cost of goods sold 700,000 Gross profit 200,000 Operating expenses 135,000 Income from operations 65,000 Other income & (expense): Interest expense (12,500) Interest income 1,500 Loss on sale of equipment (4,000) Total other income (expense) (15,000) Income before taxes 50,000 Income tax expense 20,000 Net income 30,000 - Accounts payable Interest payable Total current liabilities Notes payable Total liabilities Common stock Additional paid-in capital Retained earnings - Total S.H. equity Total liabilities & equity 70,000 7,000 77,000 235,000 312,000 40,000 25,000 103,000 168,000 480,000 81,000 (11,000) 4,000 3,000 85,000' (8,000) 176,000 59.000 261,000 51,000 30,000 10,000 20.000 5,000 75,000 28,000 125,000 43,000 386,000 94,000 Additional information: Equipment that originally cost 15,000 with accumulated depreciation of 8,000 was sold during the year for cash. The company also had 75,000 of new borrowing during the year. Depreciation expense is included as part of the amount for operating expenses in the income statement.

Please provide equation/explanation so I know how to solve for.

Answer 1

Answer-

STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED
Particulars		Amount
		$
Cash flow from operating activities
Net Income		30000
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation	($80000+$8000-$67000)	21000
Loss on sale of equipment		4000
Change in operating assets & liabilities
Increase in accounts receivable		-9000
Decrease in inventory		6000
Decrease in accounts payable		-11000
Imcrease in interest payable		3000
Net cash flow from operating activities (a)		44000
Cash Flow from Investing activities
New equipment purchased	($280000+$15000-$210000)	-85000
Old Equipment sold		3000
Net cash Flow from Investing activities (b)		-82000
Cash Flow from Financing activities
Cash dividends paid	($75000+$30000-$103000)	-2000
Common stock issued		15000
Notes payable issued		59000
Net cash Flow from Financing activities (c)		72000
Net Change in cash c=a+b+c		34000
Beginning cash balance		42000
Closing cash balance		76000