Chip Kelly is the lead accountant for No-Huddle, Inc (NHI), NHI has completed al

Question

Chip Kelly is the lead accountant for No-Huddle, Inc (NHI), NHI has completed all of its financial statements except for the statement of cash flows. The completed comparative balance sheets and income are summarized. Prior Year Balance Sheet Assets Cash Accounts receivable Merchandise inventory Property and equipment $112,500 $130,500 140,000122,500 105,000113,750 200,000105,000 (58,000) (30,000) Total assets $499,500 $441,750 Liabilities: Accounts payable Salaries and Wages Payable Notes payable, long-term $ 17,500 21,000 1,750 3,500 87,500 105,000 Stockholders' Equity Common stock Retained earnings 160,000 140,000 231,000 174,000 Total liabilities and stockholders' equity $499,500 $441,750 Income Statement Sales Cost of goods sold Other expenses Net income $500,000 260,000 28,000 125,000 $ 87,000 Other information from the company's records includes the following: a. Bought equipment for cash, $95,000. b.Paid $17,500 on long-term note payable. c. Issued new shares of common stock for $20,000 cash. d. Cash dividends of $30,000 were declared and paid to stockholders. e.Accounts Payable arose from inventory purchases on credit f. Income tax expense ($21,750) and interest expense ($5,250) were paid in full at the end of both years and are included in Other Expenses

Explanation / Answer

Cash Flow Statement of No-Huddle Inc for the current year Cash flows from operating activities Profit before taxation 108750 Adjustments for: Depreciation 28000 Working capital changes: (Increase) / Decrease in trade and other receivables -17500 (Increase) / (Decrease) in inventories 8750 Increase / (Decrease) in trade payables -3500 Increase / (Decrease) in salary and wages payable 1750 Cash generated from operations Income taxes paid -21750 Dividends paid -30000 Net cash from operating activities 74500 Cash flows from investing activities Purchase of property, plant and equipment -95000 Net cash used in investing activities -95000 Cash flows from financing activities Proceeds from issue of share capital 20000 Payment of long-term notes payable -17500 Net cash used in financing activities 2500 Net increase in cash and cash equivalents -18000 Cash and cash equivalents at beginning of period 130500 Cash and cash equivalents at end of period 112500

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