Question

STATEMENT OF CASH FLOWS (INDIRECT METHOD) The Group, Inc. Consolidated Balance Sheets (in thousands) Dec. 31, Dec. 31, Year 2 Year 1 ASSETS Current assets: Cash and cash equivalents $ 92,062 $ 72,634 Accounts receivables, net 55,947 75,492 Inventories 50,784 53,129 Prepaid expenses 12,112 13.057 Total current assets 210,912 214,312 Equipment 145,444 134,312 Less: Accumulated depreciation (50,515) (36,689) Total assets $305,841 $311.935 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 25,466 $ 34,879 Accrued liabilities 40,574 40.722 Total current liabilities 66,040 75.601 Long-term debt 10,422 10.206 Stockholders' equity: Contributed capital 1,662 1,284 Retained earnings 227.717 224,844 Total stockholders' equity 229,379 226.128 Total liabilities and stockholders' equity $305.841 $311.935 Consolidated Statement of Income (in thousands) Year 2 Net sales $130,896 Cost of sales 74.040 Gross profit 56,856 Operating expenses: Selling, general & administrative expenses 33,211 Depreciation expense 13,826 Total operating expenses 47,037 Operating income 9,819 Interest income 239 Income before income taxes 10,058 Income tax expense 3,621 Net income $ 6,437

1. Using the information provided above, compute the net cash flow provided by (used in) operating, investing and financing activities using the indirect method.

2. Prepare a cash flow statement for the year ended December 31, Year 2

Answer 1

$6,437 Group Inc. Statement of Cash flows (Indirect method) For the Year Ended December 31, Year 2 Cash flows from Operating Activities Net Profit Adjustments to reconcile net profit to net cash provided by Operating Activities Depreciation expense , Buildings $13,826 Change in operating current assets and liabilities Decrease in Accounts receivable $19,545 Decrease in Inventory $2,345 Decrease in Prepaid expenses $945 Decrease in Accounts payable $9,413 Decrease in Accrued liabilities $148) $27,100 $33,537 -$11,132 $11,132 Net Cash from Operating Activities Cash flows from Investing Activities Purchase of Equipment Net Cash from Investing Activities Cash flows from Financing Activities Borrowing through long-term debt Issue of shares Cash dividend paid Net Cash from Financing Activities Net increase (decrease) in cash Cash balance at beginning of the year Cash balance at end of the year $216 $378 -$3,564 -$2,970 $19,435 $72,634 $92,069