Required Prepare a cash flow statement for 2014 with clear documentation (i.e.,
ID: 2471733 • Letter: R
Question
Required
Prepare a cash flow statement for 2014 with clear documentation (i.e., show your work) for each section of the statement. Use either the direct or the indirect method.
Additional information
1.There were no write-offs of delinquent accounts during the year.
2.A building was sold during the year for $120.
V. (continued)
Comparative balance sheets and an income statement for 2014 are presented below for Nroklesah Company.
Nroklesah Company
Comparative Balance Sheets and Income Statement
For the Years 2013 and 2014
BALANCE SHEETS
Assets 2014 2013
Cash $ 200 $ 285
Accounts receivable 350 300
Allowance for bad debts (40) (25)
Inventory 100 135
Land 600 500
Buildings 275 255
Accumulated depreciation-buildings (75) (80)
Total assets $1,410 $1,370
Liabilities & Owners’ Equity
Liabilities
Accounts payable $ 300 $ 305
Wages payable 70 60
Dividends payable 30 25
Taxes payable 50 45
Long-term Bonds payable 100 100
Premium on bonds payable 7 10
Total liabilities 557 545
Owners’ Equity
Common stock 650 600
Retained earnings 203 225
Total owners’ equity 853 825
Total liabilities & owners’ equity $1,410 $1,370
INCOME STATEMENT (2008)
Revenue $1,500
Cost of goods sold 850
Gross margin 650
Operating expenses
Wage expense $171
Depreciation expense 40
Bad debt expense 15
Bond interest expense 14
Total operating expenses 240
Net operating income 410
Gain on sale of building 60
Net income before tax 470
Income tax 141
Net income after tax $ 329
BALANCE SHEETS
Assets 2014 2013
Cash $ 200 $ 285
Accounts receivable 350 300
Allowance for bad debts (40) (25)
Inventory 100 135
Land 600 500
Buildings 275 255
Accumulated depreciation-buildings (75) (80)
Total assets $1,410 $1,370
Liabilities & Owners’ Equity
Liabilities
Accounts payable $ 300 $ 305
Wages payable 70 60
Dividends payable 30 25
Taxes payable 50 45
Long-term Bonds payable 100 100
Premium on bonds payable 7 10
Total liabilities 557 545
Owners’ Equity
Common stock 650 600
Retained earnings 203 225
Total owners’ equity 853 825
Total liabilities & owners’ equity $1,410 $1,370
INCOME STATEMENT (2008)
Revenue $1,500
Cost of goods sold 850
Gross margin 650
Operating expenses
Wage expense $171
Depreciation expense 40
Bad debt expense 15
Bond interest expense 14
Total operating expenses 240
Net operating income 410
Gain on sale of building 60
Net income before tax 470
Income tax 141
Net income after tax $ 329
Explanation / Answer
Statement of Cash Flows 2014 Cash flows from operating activities Profit before taxation 470.00 Adjustments for: Depreciation 40 Gain on sale of equiment (60.00) Interest Expense 14.00 Working capital changes: Increasein trade and other receivables, net (35.00) Decrease in inventories 35.00 (Decrease in Accounts Payable (5.00) Increase in Wages payable 10.00 Cash generated from operations 469.00 Income taxes paid (45+141-50) 136 Interest paid (10+14-7) 17 Net cash from operating activities 316.00 Cash flows from investing activities Purchase of Land (100.00) Proceeds from sale of Building 120.00 Purchase of Building (125.00) Net cash used in investing activities (105.00) Cash flows from financing activities Issue of Common Stock 50.00 Payment of Dividend (346.00) Net cash used in financing activities (296.00) Net increase in cash and cash equivalents (85.00) Cash and cash equivalents at beginning of period 285.00 Cash and cash equivalents at end of period 200.00 Dividend paid Opening balance 225 Add: Net Income 329 Less: Closing Balance 203 Dividend payable 351
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