Question

Hello,

I am sending this question in two parts, I am having problems creating a state of cash flows for the year.

Hello,

This is the second part of my original question.

The company reported net income this year as follows:

Sales					$	2,000,000
Cost of goods sold						1,300,000
Gross margin						700,000
Selling and administrative expenses						490,000
Net operating income						210,000
Nonoperating items:
Gain on sale of investments	$	60,000
Loss on sale of equipment		(20,000	)			40,000
Income before taxes						250,000
Income taxes						80,000
Net income					$	170,000

Using the indirect method, prepare a statement of cash flows for this year. (List any deduction in cash and cash outflows as negative amounts.)

Answer 1

CASH FLOW STATEMENT AS PER INDIRECT METHOD :

1 . CASH FLOWS FROM OPERATING ACTIVITIES :

Net Income $ 170,000

Loss on sale of equipment $ 20,000

Gain on sale of investments ( $ 60,000)

_____________

$ 130,000

2. CASH FLOWS FROM INVESTING ACTIVITIES :

Gain on sale of investments $ 60,000

Loss on sale of equipment ($ 20,000)

____________ $ 40,000

Net cash flow from ooerating ans investing activities is $170,000