The following information is taken from French Corporation\'s financial statemen
ID: 2501828 • Letter: T
Question
The following information is taken from French Corporation's financial statements:
2015
2014
$ 87,600
$ 32,400
122,400
96,000
186,000
210,000
9,000
8,160
120,000
72,000
346,800
292,800
24,000
42,000
$852,000
$734,040
$ 108,000
$ 100,800
64,800
75,600
150,000
72,000
120,000
120,000
96,000
12,000
331,200
363,240
$852,000
$734,040
For 2015 Year
$87,960
22,800
6,000
36,000
none
Prepare a statement of cash flows for French Corporation for the year 2015. (Use the indirect method.) (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
2015
2014
Cash$ 87,600
$ 32,400
Accounts receivable122,400
96,000
Allowance for doubtful accounts (5,400) (3,720) Inventory186,000
210,000
Prepaid expenses9,000
8,160
Land120,000
72,000
Buildings346,800
292,800
Accumulated depreciation (38,400) (15,600) Patents24,000
42,000
$852,000
$734,040
Accounts payable$ 108,000
$ 100,800
Accrued liabilities64,800
75,600
Bonds payable150,000
72,000
Common stock120,000
120,000
Retained earningsappropriated96,000
12,000
Retained earningsunappropriated331,200
363,240
Treasury stock, at cost (18,000) (9,600)$852,000
$734,040
Explanation / Answer
French Corporation Cash Flows using Indirect Method as on 31 December 2015 $ $ Net Cash Flows from Operating Activities Net Income for the year 87960 Add : Depreciation for the year 22800 Add : Amortisation of Patents 6000 28800 Net Cash Flows before Working Capital changes 116760 Less : Increase in Accounts Receivable -26,400 Add : Increase in Allowance for Doubtful Accounts 1,680 Add : Decrease in Inventory 24,000 Less : Increase in Prepaid Expenses -840 Add : Increase in Accounts Payable 7,200 Less : Decrease in Accrued Liabilities -10,800 -5,160 Net Cash Inflows from Operating Activities 111600 Net Cash Flows from Investing Activities Purchase of Land -48000 Purchase of Buildings -54000 Sale of Patents (net of amortisation) 24000 Net Cash Outflows from Investing Activities -78000 Net Cash Flows from Financing Activities Purchase of Bonds Payable -78000 Purchase of Treasury Stock -8400 Dividends Declared and Paid -36000 Change in Retained Earnings 144000 Net Cash Inflows from Financing Activities 21600 Net Increase in Cash and Cash Equivalents for the year 55200 Opening Cash and Bank Balance 32400 Closing Cash and Bank Balance 87600
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