Condensed financial data of Vaughn Company for 2017 and 2016 are presented below

Question

Condensed financial data of Vaughn Company for 2017 and 2016 are presented below VAUGHN COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2017 AND 2016 Cash Receivables Inventory Plant assets Accumulated depreciation Long-term investments (held-to-maturity) 2017 $1,800 1,750 1,630 1,910 2016 $1,130 1,320 1,890 1,720 (1,190) (1,170) 1,280 $7,180 1,410 $6,300 Accounts payable Accrued liabilities Bonds payable Common stock Retained earnings $1,230 190 1,400 1,930 2,430 $7,180 $910 240 1,540 1,680 1,930 $6,300

Explanation / Answer

Solution:

VAUGHN Company Statement of Cash Flows For the Year ending December 31, 2017 (Indirect method) Particulars Details Amount Cash Flow from Operating Activities: Net Income $760.00 Adjustments to reconcile net income to cash flow from operating activities: Depreciation ($1190-$1170) $20.00 Gain on sale of investment -$90.00 Increase in Accounts Receivables ($1750 - $1320) -$430.00 Decrease in Inventory ($1890 - $1630) $260.00 Increase in Accounts payable ($1230-$910) $320.00 Decrease in Accrued Liabilities ($240-$190) -$50.00 Total Adjustments $30.00 Net Cash Flow From Operating Activites (A) $790.00 Cash Flow from Investing Activities: Sale of Investment [($1410-$1280) +$90] $220.00 Purchase of Plant Asset in cash [($1910-$1720)-$60] -$130.00 Net Cash Flow From Investing Activites (B) $90.00 Cash Flow from Financing Activities: Dividend paid -$260.00 Repayment of bond payable ($1540-$1400) -$140.00 Cash Proceeds from issue of common stock [($1930-$1680)-$60] $190.00 Net Cash Flow From Financing Activites (C) -$210.00 Total Cash flow from all activities (A+B+C) $670.00 Cash at the beginning of the year $1,130.00 Cash at the end of year $1,800.00

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