Question

Consider the balance sheets and selected data from the income statement of Keith Corporation on this and the next page. Complete the cash flow statement for 2012. Keith Corporation Balance Sheets December 31 Assets 2012 2011 Cash Marketable securities Accounts receivable Inventories Total current assets Gross fixed assets Less: Accumulated depreciation Net fixed assets Total assets $ 1,500 1,800 2,000 2,900 $ 8,200 $29,500 14,700 $14,800 $23,000 $ 1,000 1,200 1,800 2,800 $ 6,800 $28,100 13,100 $15,100 $21,800 $ 1,500 2,200 300 Liabilities and Stockholders' Equity Accounts payable Notes payable Accruals Total current liabilities Long-term debt Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 1,600 2,800 200 $ 4,600 5,000 $ 9,600 $10,000 $ 4,000 5,000 $ 9,000 $10,000 2,800 $12.800 $21,800 3,400 $13,400 $23,000

Answer 1

KEITH CORPORATION
Statement of Cash Flows (Indirect Method)
For the year ended 2012
	Amount ($)	Amount ($)
Cash flows from Operating Activities
Net Income		1,400
Adjustments to reconcile net income to Net cash provided by operating activities
Add: Depreciation Expenses	1,600
Less: Increase in marketable securities	-600
Less: Increase in accounts receivables	-200
Less: Increase in inventory	-100
Add: Increase in accounts payable	100
Add: Increase in notes payable	600
Less: Decrease in accruals	-100	1,300
Net cash provided by operating activities		2,700
Cash flows from Investing Activities
Purchase of fixed assets [$29,500 - $28,100]	-1,400
Net Cash used in Investing Activities		-1,400
Cash flows from Financing Activities
Dividend Paid	-800
Net Cash used in financing Activities		-800
Net Increase in cash		500
Add: Cash balance, at the beginning		1,000
Cash balance, at the end		1,500

Dividend paid = Net profit after tax – Increase in retained earnings

= $1,400 – [$3,400 - $2,800]

= $1,400 - $600

= $800