Question

Condensed financial data of Swifty Company for 2017 and 2016 are presented below. SWIFTY COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31,2017 AND 2016 2017 2016 1.840 $1,170 Cash 1,730 1,310 Receivables 1,580 1,880 Inventory ,910 1,700 Plant assets 1.210) (1,170) Accumulated depreciation Long-term investments (held-to-maturity) 1.310 1420 $7,160 $6,310 Accounts payable $1.190 $900 210 Accrued liabilities 260 Bonds payable 1400 1,580 Common stock 1,880 1,720 2,480 1,850 Retained earnings $7,160 $6,310 SWIFTY COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31,2017 Sales revenue $7,000 Cost of goods sold 4,710 Gross margin 2,290 Selling and administrative expenses 940 Income from operations 1,350 Other revenues and gains Gain on sale of investments 80 Income before tax 1,430 Income tax expense 540 890 Net income Cash dividends 260 Income retained in business $630 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 eg. 15,000 or in parenthesis eg. (15,000).) SWIFTY COMPANY Statement of Cash Flows (Direct Method)

Answer 1

Cash Flow Statement-Direct Method:-

Cash Flow from Operating Activities:-
Cash Collected from Customers ($7000{sales} - $420{INCREASE account receivable}		$6580
Cash paid to suppliers ($4710{COGS} - $300{decrease inventory} - $290{increase account payable})	($4120)
Cash paid for selling & admn exp ($940 + $50{decrease accrued liabilities}) - $40 {Depreciation	($950)
Cash paid for Income Tax	($540)
		($5650)
Net Cash Provided by Operating Activities		$970
Cash Flow from Investing Activities:-
Purchase of Plant Assets ($210{Increase Plant} - $70{common stock issue for plant})	($140)
Sale of Held-to-Maturity Investments ($110(Decrease Long Term Investment} + $80{Gain on sale })	$190
Net Cash Provided by Investing Activities		$50
Cash Flow from Financing Activities:-
Repaid Bond Payable	($180)
Issuance of Capital Stock ($160{Increase common stock} - $70{common stock issue for plant})	$90
Cash Dividend Payment	($260)
Net Cash Used by Financing Activities		($350)
Net Increase in Cash		$670
Cash at Beginning of Period		$1170
Cash at End of Period		$1840
Noncash Investing and Financing Activities
Issuance of Common Stock for Plant Assets		$70