The following information was obtained from analysis of selected accounts of Orl
ID: 2451921 • Letter: T
Question
The following information was obtained from analysis of selected accounts of Orlando Company for the year ended December 31, 2008.
Instructions: From the information given, prepare a statement of cash flows using the indirect method.
Increase in long-term debt $ 57,000 Purchase of treasury stock 52,000 Depreciation and amortization197,000 Gain on sale of equipment (included in net income) 6,000 Proceeds from issuance of common stock 184,000 Purchase of equipment 434,000 Proceeds from sale of equipment 20,000 Payment of dividends 49,000 Net income 375,000 Increase (decrease) in working capital accounts: Cash 45,000 Accounts receivable 229,000 Inventories 275,000 Trade notes payable 167,000 Accounts payable 124,000 Income taxes payable (34,000) Cash balance, January 1, 2008 120,000
Explanation / Answer
Cash Flow Statement A CASH FLOW FROM OPERATING ACTIVITIES Net Profit Before Tax 3,75,000.00 Adjustments for: Depreciation 1,97,000.00 Preliminary Expenses w/off - Deferred Revenue Expenditure - (Profit)/loss on sale of Assets (6,000.00) Interest & Finance Charges - Interest on FD - Dividend Income - 1,91,000.00 Operating Profit before Working Capital Changes 5,66,000.00 Adjustments for: Decrease/(Increase) in Accounts Receivables (2,29,000.00) Decrease/(Increase) in Inventories (2,75,000.00) Increase/(Decrease) in Notes Payables 1,67,000.00 Increase/(Decrease) in Accounts Payables 1,24,000.00 (2,13,000.00) Cash generated from operations 3,53,000.00 Income Tax paid (34,000.00) Net Cash flow from Operating activities 3,19,000.00 B CASH FLOW FROM INVESTING ACTIVITIES Purchase of Fixed Assets (4,34,000.00) Purchase of treasury stock (52,000.00) Mutual Fund - Sale of Fixed Assets 20,000.00 Increase in Advances & others - Interest on FD - Dividend Income - Net Cash used in Investing activities (4,66,000.00) C CASH FLOW FROM FINANCING ACTIVITIES Proceeds from Long term Borrowings 57,000.00 Proceeds from issuance of common stock 1,84,000.00 Dividend paid (49,000.00) Interest paid - Net Cash used in financing activities 1,92,000.00 Net increase in cash & Cash Equivalents 45,000.00 Cash and Cash equivalents as at 01.01.2008 1,20,000.00 Cash and Cash equivalents as at 31.12.2008 1,65,000.00
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