Presented below are the 2016 income statement and comparative balance sheets for
ID: 2416282 • Letter: P
Question
Presented below are the 2016 income statement and comparative balance sheets for Santana Industries.
Equipment with a book value of $1,000 (cost of $2,500 less accumulated depreciation of $1,500) was sold for $1,000.
Prepare Santana Industries' 2016 statement of cash flows, using the indirect method to present cash flows from operating activities. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands.)
Additional information for the 2016 fiscal year ($ in thousands): 1. Cash dividends of $1,500 were declared and paid. 2. Equipment costing $5,000 was purchased with cash. 3.Equipment with a book value of $1,000 (cost of $2,500 less accumulated depreciation of $1,500) was sold for $1,000.
4. Depreciation of $2,100 is included in operating expenses.Explanation / Answer
Santana Industries Cash flow statement -Indirect Method For the year ending Dec 31,2016 Details Amt $ Cash flow from Operating Activities Net Income 3,800.00 Add : Depreciation 2,100.00 Less Increase in Accounts receivable (800.00) Less : Increase in Inventory (1,500.00) Add : Decrease in Prepaid expense 200.00 Add: Increase in Accounts payable 800.00 Add: Increase in interest payable 150.00 Add: Increase in deferred service revenue 250.00 Less: Decrease in Income tax payable (300.00) a Total Cash flow from Operating Activities 4,700.00 Cash Flow from Investing Activities Cash flow from Asset sale 1,000.00 Cash payment for Equipment purchase (5,000.00) b Total Cash Flow from Investing Activities (4,000.00) Cash flow from Financing Activities Cash flow from Loan raising 6,000.00 Cash Dividends paid (1,500.00) c Total Cash flow from Financing Activities 4,500.00 d Total cash flow from operating, investing & Financing Activities 5,200.00 Opening Cash Balance 2,650.00 Add Changes in Cash flow 5,200.00 Closing Cash Balance 7,850.00
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