Question

Prepare a statement of cash flow on both the direct and indirect method 2019 2018

Assets: Cash 245,000 120,000 Accounts receivable, net 87,000 65,000 Inventory 54,000 60,000 Property, plant & equipment 650,000 600,000 Accumulated depreciation (90,000) (60,000) Total Assets 946,000 785,000 Liabilities & Equity Accounts payable 44,000 40,000 Accrued liabilities 41,000 40,000 Common stock 460,000 460,000 Retained earnings 401,000 245,000 Total liabilities and equity 946,000 785,000 Sales 1,150,000 Cost of goods sold 625,000 Gross profit 525,000 Operating expenses 180,000 Pre-tax income 345,000 Income taxes 69,000 Net income 276,000

Answer 1

Cash Flows from operating activities - Direct Maethod For the Year Ended 2019 Cash flows from Operating Activities: Cash receipts from customers Cash payment to suppliers Cash payments for Operating expenses Cash payment for Income tax Expenses Net cash Provided by operating activities $ 1,128,000 $ (615,000) $ (149,000) $ (69,000) $ 295,000 Working Notes : Cash receipts from customers Opening balance of accounts Receivables Add: Sales Revenue $ 65,000 $ 1,150,000 $ 1,215,000 $ 87,000 $ 1,128,000 Less: closing balance of accounts Receivables Cash payment to suppliers Cost of Goods Sold Add: Closing balance of Inventory Opening balance of accounts payables $ 625,000 $ 54,000 $ 40,000 $ 719,000 $ 60,000 $ 44,000 $ 615,000 Less: Opening balance of Inventory Closing balance of accounts payables

Cash payments for Operating expenses Operating Expense Excluding Depreciation Opening balance of accured liabilities $ $ $ $ $ 150,000 40,000 190,000 41,000 149,000 Closing balance of accured liabilities $276,000 Cash Flows from operating activities - Indirect Maethod For the Year Ended 2019 Cash flows from operating activities: Net Income Adjustments to reconcile net income to net cash provided by operations: Depreciation $ Increase in Accounts receivables $ Decrease in Inventory $ Increase in accounts payable $ Increase in accured liabilities $ Net cash Provided by operating activities 30,000 (22,000) 6,000 4,000 1,000 $ 19,000 $295,000