Question

ON THE BASIS OF THE FOLLOWING DATA FOR BRANCH CO. FOR THE CURRENT AND PRECEDING YEARS ENDED DECEMBER 31, PREPARE A STATEMENT OF CASH FLOWS USING THE INDIRECT METHOD. ASSUME EQUIPMENT WAS PURCHASED, ON CASH COSTING 100,000 LAND WAS SOLD FOR 12,000 NET INCOME EARNED IN CURRENT YEAR 44800 DIVIDENDS DECLARED AND EARNED 14400 STOCK WAS ISSUED FOR CASH BALANCE SHEET CURRENT YEAR PRIOR YEAR CASH 52000 43200 ACCOUNTS RECEIVABLE (NET) 62400 68000 INVENTORIES 85200 72000 LAND 0 16000 EQUIPMENT 396000 296000 ACCUMULATED DEPRECIATION -172000 -126400 423600 368800 0 0 ACCOUNTS PAYABLE (MERCHANDISE CREDITORS) 42800 44000 COMMON STOCK, $10 PAR 160000 136000 PAID-IN CAPITAL IN EXCESS OF PAR—COMMON STOCK 49600 48000 RETAINED EARNINGS 171200 140800 423600 368800

Answer 1

Cash Flow Statement
At year end December 31
Particulars	Amount
Net Income	$             44,800
Adjustments to reconcil net income to net Cash provided by operating Activities
Add: Loss on sale of Land	$               4,000
Add: Depreciation	$             45,600
( Increase)/ Decrease in Current assets
Decrease in Account Receivables	$               5,600
Increase in Inventories	$           -13,200
Increase/ (Decrease) in Current Labilities
Decrease in Account Pyable	$             -1,200
Net Cash Flow from Operating Activities	$             85,600
Cash Flow From Investing Activities
Purchase of Equipment	$       -1,00,000
Sale of Land	$             12,000
Csh Flow From Investing Activities	$           -88,000
Cash Flow from Financing Activities
Issue of Common Stock	$             25,600
Dividend	$           -14,400
Cash Flow from Financing Activities	$             11,200
Net Increase/(Decrease ) in Cash	$               8,800
Add: Beginning Cash Balance	$             43,200
Closing Blance of Cash	$             52,000