Question

Taking it to the Net A19 BTN 12-3 Access the April 14, 2016, filing of the 10-K report (for year ending December 31, 2015) of Mendocino Brewing Company, Inc. (ticker: MENB) at SEC.gov @ Required 1. Does Mendocino Brewing use the direct or indirect method to construct its consolidated statement of cash flows? 2. For the year ended December 31, 2015, what is the largest item in reconciling the net income (or loss) to net cash provided by operating activities? 3. In the recent two years, has the company been more successful in generating operating cash flows or in generating net income? Identify the figures to support the answer. 4. In the year ended December 31, 2015, what was the largest cash outflow for investing activities and for financing activities? 5. What item(s) does the company report as supplemental cash flow information? 6. Does the company report any noncash financing activities for 2015? Identify them, if any.

Answer 1

1. Does Mendocino Brewing use the direct or indirect method to construct its consolidated statement of cash flows? The Mendocino Brewing use the indirect method to construct its consolidated statement of cash flows. Indirect Method of the Cash Flow Statement prepares the cash flow statement starting with the Net Income and arriving at the Cash Flow from Operating Activities. 2. For the year ended December 31, 2015, what is the largest item in reconciling the net income (or loss) to net cash provided by operating activities? Depreciation and Amortization has the balance of $ 1,226,200 for the year ended December 31, 2015. Therefore, it is the largest item in reconciling the net income to net cash provided by operating activities. 3. In the recent two years, has the company been more successful in generating operating cash flows or in generating net income? Identify the figures to support the answer. In 2014, Net cash from operating activities is $ 793,400 and the Net Loss is $ 1,539,500. In 2015, Net cash provided from operating activities is $ 1,105,900 and the Net Loss decreased to $ 1,148,500 Since the Net cash from operating activities and Net loss in 2015 is better than the Net cash from operating Activities and Net Loss in 2014, the company has been more successful in generating operating cash flow in the Year 2015

4. In the year ended December 31, 2015, what was the largest cash outflow for investing activities and for financing activities? The largest cash outflow for investing activities is Purchase of Property, Equipment and Leasehold Improvements ($ 642,400) and for financing activities is Borrowing on Notes Payable ($ 1,000,000) 5. What item(s) does Mendocino Brewing report as supplementary cash flow information? Mendocino Brewing report Interest and Income Taxes as supplementary cash flow information. 6. Does Mendocino Brewing report any noncash financing activities for 2015? Identify them, if any. Seller Financed Assets are reported as a non-cash investing and financing activity for 2015.