Question

Pike Corp balance sheet and income statement appear below TAKE HOME PROBLEM, TO BE TURNED IN AT THE BEGINNING OF CLASS OF EXAM # . Comparative Balance Sheet .Net Income for the period was $70. Assets Cash Accounts Receivable Inventory PP&E Accum Depr Total Assets 12/31/2015 12/31/2016The company so s 60 $ 47 $ 35 40 . The sold asset had accumulated S 43 $ 33 $ 510$ 580 that was originally purchased for $50 depreciation of $30. The company paid a cash dividend during the year and did not issue any . (340 (360) 308 340 bonds payable or repurchase any of its own common stock. Liabilities & Equity Accounts Payable Accrued Liabilities Income Tax Payable Bonds Payable Common Stock Retained Earnings Total Liabilities & Equity $ 30 $ 26 $15 S 20 s36 40 S 160 $ 120 45 79 $ 308 і $ 340 Required: . Construct, in good form, the company's Statement of Cash Flows for the period, using the indirect method. (15pts)

Answer 1

Answer

• NOTE: It’s a TAKE HOME PROBLEM, not a Exam Question
• All working forms part of the answer
• Statement of Cash Flows

For the year ending 31 Dec 2016

Cash Flows from Operating Activities
Net Income		$                    70.00
Adjustment to reconcile Net Income to
Depreciation expense	$              50.00
Gain on Sale of Equipment	$              (5.00)
Increase in Accounts receivables	$              (5.00)
Decrease in Inventory	$ 10.00
Decrease in Accounts payable	$              (4.00)
Increase in Accrued Liabilities	$                 5.00
Increase in Income tax payable	$                 4.00
		$                    55.00
Net Cash Flows from Operating Activities		$                  125.00
Cash Flows from Investing Activities
Purchase of Plant & Equipment	$          (120.00)
Sale of Plant & Equipment	$              25.00
Net Cash flows from Investing Activities		$                  (95.00)
Cash Flows from Financing Activities
Repayment of Bonds Payable	$            (40.00)
Cash received from Common Stock	$              10.00
Dividends paid	$            (13.00)
Net Cash Flows from Financing Activities		$                  (43.00)
Decrease in Cash		$                  (13.00)
Add: Cash at the beginning [12/31/2015]		$                    60.00
Cash at the end [12/31/2016]		$                    47.00

• Workings

Plant & Equipment
Beginning Balance	$                    510.00
Purchased (Sold)	$                    (50.00)
Ending balance	$                    580.00
Purchased	$                 (120.00)

Accumul Dep
Beginning Balance	$                    340.00
Accumulated depreciation on Asset sold	$                    (30.00)
Ending Balance	$                    360.00
Depreciation Expense	$                    (50.00)

Retained Earnings
Beginning Balance	$                      22.00
Net Income	$                      70.00
Dividends	$                      13.00
Ending Balance	$                      79.00