Question

ACC204 Class Exercise Nov 21, 2019 Prepare a Statement of Cash Flows for a company that has the following data A/R increased 50,000 Inventory increased $75,000 Depreciation & Amortization $35,000 for the year A/P increased $80,000 Plant equipment $60,000 purchased Notes Payable increased $25.000 Stockholder dividends of $30,000 paid Net Income $125,000 Beginning cash $25,000

Answer 1

Ans.	Statement of Cash Flows
	Particulars	Amount	Amount
	Cash flow from operating activities:
	Net income		$125,000
	Add: Non cash/operating expenses:
	Depreciation & Amortization	$35,000
	Total non cash expenses		$35,000
	Operating profit before working capital changes		$160,000
	Changes in current assets and liabilities
	Less: Increase in accounts receivables	-$50,000
	Less: Increase in inventory	-$75,000
	Add: Increase in A/P	$80,000
	Add: Increase in notes payable	$25,000	-$20,000
	Net cash from operating activities (A)		$140,000
	Cash flow from Investing activities:
	Purchase of plant equipment	-$60,000
	Net cash used by investing activities (B)		-$60,000
	Cash flow from Financing activities:
	Payment of dividends	-$30,000
	Net cash from financing activities ©		-$30,000
	Net increase in Cash (A + B + C)		$50,000
	Add: Cash at beginning of period		$25,000
	Cash at ending of period		$75,000
	*Decrease in current liabilities and Increase in current assets other than cash is deducted from Net Income.
	*Increase in current liabilities and Decrease in current assets other than cash is added to Net Income.
	*Non cash & Non operating expenses are added to Net income.
	*Non cash & Non operating income are deducted from Net income.
	*Sale or purchase transation of property, plant and equipment are listed in the Investing activities section
	of cash flow statement.
	*Issue and redemption of shares and debentures and dividends paid are the financing activities.