Question

Exercise 23-12

Condensed financial data of Splish Company for 2017 and 2016 are presented below.

SPLISH COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2017 AND 2016
		2017			2016
Cash		$1,830			$1,140
Receivables		1,720			1,280
Inventory		1,610			1,900
Plant assets		1,870			1,690
Accumulated depreciation		(1,210	)		(1,190	)
Long-term investments (held-to-maturity)		1,270			1,410
		$7,090			$6,230
Accounts payable		$1,230			$910
Accrued liabilities		200			250
Bonds payable		1,410			1,540
Common stock		1,880			1,710
Retained earnings		2,370			1,820
		$7,090			$6,230

SPLISH COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017
Sales revenue		$6,880
Cost of goods sold		4,680
Gross margin		2,200
Selling and administrative expenses		930
Income from operations		1,270
Other revenues and gains
Gain on sale of investments		80
Income before tax		1,350
Income tax expense		540
Net income		810
Cash dividends		260
Income retained in business		$550

Additional information:

During the year, $70 of common stock was issued in exchange for plant assets. No plant assets were sold in 2017.

Prepare a statement of cash flows using the direct method. (Show amounts in the investing and financing sections that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

Answer:

Cash Flow statement
particulars					amount	amount
Cash flow from operating activity						6430
cash receipt from customer
less: cash paid for purchase					4070
less: cash paid for selling & adm					960
cash paid for income tax					540	5570
net cash flow from operating activities						860
cash flow from investing activity
sale of investment (1410-1270+80)					220
purchase of plant (1870-1690-70)					-110
net cash flow from investing activity						110
cash flow from financing activity
issue of common stock (1880-1710-70)					100
payment of cash dividend					-260
redemption of bond (1540-1410)					-130
net cash flow from financing activity						-290
net increase /decrease in cash & equivalent						680
cash balance at the beginning						1140
cash & cash balance at the end						1830
working notes
cash receipt from customer
accounts receivable in beginning					1270
add: sale					6880
less: accounts recevable at end					1720
cash rece from customer						6430
cost of purchase
inventory at the end					1610
add: cost of goods sold					4680
less: inventory at beginning					1900
cost of purchase					4390
cash paid for purchase
accounts payable at beginning					910
add: cost of purchase					4390
less: accounts payable at the end					1230
						4070
cash paid for selling & adm
accrued laibilities at beginning					250
ADD: SELLing & adm exp					930
less: accrued laibility end					200
operating exp					980
less: dep in exp (1210-1190)					20
cash paid for selling & adm						960