Question

Using the income statement and balance sheets of Niagara Company below, prepare a statement of cash flows for the year ended December 31, Year 9, using the direct method.

NIAGRARA COMPANY Income statement For Year Ended Dec.31, Year9
Sales	$1000
Cost of goods sold	(650)
Depreciation expense	(100)
Sales and general expense	(100)
Interest expense	(50)
Income tax expense	(40)
Net income	$60

NIAGARA COMPANY Balance Sheets December 31, Year 9 and Year 8 Year 8 Year 9 $ 60 520 770 Assets Cash .................. $ 50 Accounts receivable. net .. 500 Inventory ..................... 750 Current assets. ............ 1,300 Fixed assets, net ........... 500 Total assets ................. $1,800 1,350 550 $1,900 $ 75 615 - 20 Liabilities and Equity Notes payable to banks ...... $ 100 Accounts payable .......... 590 Interest payable. ............ 10 Current liabilities ............ Long-term debt ........ Deferred income tax. ....... 300 Capital stock............ 400 Retained earnings ............ 100 Total liabilities and equity .... $1,800 710 350 310 400 130 $1,900

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and format. For detailed answer refer to the supporting sheet.

Answer Nigrara Company Cashflow Statement For Year Ended Dec. 31 5 Cashflow from operating activities 6 Cash Received from customers (500+1000-520) $ 980 7 Cash Paid to suppliers (590+(770+650-750)-615) $ (645) 8 Cash Paid for sale and general expense $ (100) 9 Cash paid for interest expense (10+50-20) (40) 10 Cash paid for income tax expense (300+40-310) $ (30) 11 Net Cash inflow from operating activities $ 165 13 Cash flow from investing activities 14 Cash Payment for purchase of equipment (550+10 $ 15 Net cash outflow from investing activities (150) $ (150) 16 (25) 50 (30) 17 Cash flow from financing activities 18 Repayment from note payable (100-75) 19 Proceeds from long term debt (350-300) 20 Payment of Dividend (100+60-130) 21 Net cash outflow from financing activities 22 Net cash inflow from all activities 23 Beginning cash balance 24 Ending cash balance 60 25