Cash flows from operating activities Adjustments to reconcile net income to net
ID: 2382034 • Letter: C
Question
Cash flows from operating activities
Adjustments to reconcile net income to net cash provided by operating activities
Cash flows from operating activities
Adjustments to reconcile net income to net cash provided by operating activities
Additional information: The 2013 Income Statement reported $8,100 in depreciation expense, a $5,400 loss on sale of investments and Net income of $48,600. Cash dividends of $24,300 were declared and paid. Long-term investments that has a cost of $24,300 were sold for $18,900 Sales for 2013 were $162,000. Prepare a statement of cash flows for 2013 using the indirect method.Explanation / Answer
CASHFLOW FROM OPERATING ACTIVITIES
NET INCOME = 48600
ADD:-DEPRECIATION = 8100
ADD:-LOSS ON SALE OF INVESTMENTS = 5400
ADJUSTMENT FOR WORKING CAPITAL CHANGES
LESS;-INCREASE IN ACCOUNTS RECIEVABLE = (5400)
LESS;-INCREASE IN INVENTORIES = (9450)
ADD:-DECREASE IN PREPAID EXPENSES = 4050
ADD;INCREASE IN ACCOUNTS PAYABLE = 13500
A]CASH INFLOW FROM OPERATING ACTIVITIES = 64800
CASHFLOW FROM INVESTING ACTIVITIES
SALE OF LONG TERM INVESTMENTS = 18900
PURCHASE OF EQUIPMENT = (37800)
B]CASH OUTFLOW FROM INVESTING ACTIVITIES = (18900)
CASHFLOW FROM FINANCING ACTIVITIES
DIVIDENDS PAID = (24300)
ISSUE OF COMMON STOCK = 22950
PAYMENT OF BONDS = (13500)
C]CASH OUTFLOW FROM FINANCING ACTIVITIES = (14850)
CASH GENERATED DURING THE YEAR [A+B+C] =31050
ADD:OPENING CASH BALANCE =13500
CLOSING CASH BALANCE = 44550
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