Question

Use the information gathered below as needed to create a Statement of Cash Flows: Indirect Method
Note: not all of the information below is needed.
	Dec. 31	Dec. 31
	2017	2016
From Financial Statements:
Net Income	50,000	30,000
Depreciation Expense	25,000	25,000
Accumulated Depreciation	75,000	50,000
Inventory	50,000	45,000
Accounts Receivables	10,000	12,000
Accounts Payables	20,000	17,000
Cash	35,000	15,000
Other Activity of Note in 2017:
Purchases of Equipment	100,000
Issuance of Common Stock	60,000
Sale of Land	30,000
Cash Dividends Paid	15,000
Long-term Debt maturing and Paid-off	80,000
Issuance of new Long-Term Debt	50,000

Answer 1

Statement of cash flows

Particulars	$	$
Cash flow from Operating Activities
Net income	50,000
Add: Adjustments to reconcile net income to net cash provided by operating activities
Depreciation on property, plant and equipment	25,000
Changes in current operating assets and liabilities:
Accounts receivable decrease	2,000
Inventory increase	- 5,000
Accounts payable increase	3,000
Net cash provided by Operating Activities		75,000
Cash flow from Investing Activities
Sale of land	30,000
Purchase of equipment	- 100,000
Net cash used by Investing Activities		- 70,000
Cash flow from Financing Activities
Issue of common stock	60,000
Long-term Debt maturing and Paid-off	- 80,000
Issuance of new Long-Term Debt	50,000
Dividend paid	- 15,000
Net cash provided by Financing Activities		15,000
Net increase in Cash and Cash Equivalents(I +II +III)		20,000
Add: Cash in the beginning of the period		15,000
Cash at the end of the period		35,000

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