Question

please correct

5. A company began a year with Cash of SK. These items increased by the amounts displayed during the calendar year: Inventories, S72; Accumulated depreciation, $20: Accounts receivable, $8, Accounts payable, $2; Notes payable, $8; purchases of Fixed assets, $80; Common stock, $25. Net income is $34. There were no changes in long-term debt and no earnings were distributed to stockholders. Complete the following Statement of Cash Flows: Cash Flows from Operating Activities Net income 34 Depreciation 10 + Accounts Receivable + Inventories 22 -22 O oo w S Co - Accounts Payable - Notes payable (other current liabilities) Deferred income taxes Total adjustments Net cash flow from operating activities Cash Flows from Investing Activities Proceeds from the sale of assets Capital expenditures - 50 - 50 Net cash flow from investing activities Cash Flows from Financing Activities Proceeds from issuance of long-term debt Proceeds from issuance of equity 25 Repayments of debt Dividends paid Net cash flow from financing activities Net Increase (Decrease) in Cash -40 Cash, Beginning of Year 15 Cash, End of Year - 26

Answer 1

Ans.	Particulars	Amount	Amount
	Cash flow from operating activities:
	Net income		$34
	Add: Non cash/operating expenses:
	Accumulated depreciation	$10
	Total non cash expenses		$10
	Operating profit before working capital changes		$44
	Changes in current assets and liabilities
	Less: increase in accounts receivables	-$8
	Less: Increase in inventory	-$22
	Add: Increase in Accounts payable	$3
	Add: Increase in Notes payable	$8	-$19
	Net cash from operating activities		$25
	Cash flow from Investing activities:
	Purchase of fixed assets	-$50
	Net cash used by investing activities (B)		-$50
	Cash flow from Financing activities:
	Issuance of common stock	$25
	Net cash from financing activities ©		$25
	Net increase in Cash (A + B + C)		$0
	Add: Cash at beginning of period		$15
	Cash at ending of period		$15
	*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.