Audio City, Inc. is developing its annual financial statements at December 31. T
ID: 2531848 • Letter: A
Question
Audio City, Inc. is developing its annual financial statements at December 31. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized below:
Accounts Payable includes only inventory purchases made on credit. Because a liability relating to taxes does not exist, assume that they were fully paid in cash.
Prepare the statement of cash flows for the current year ended December 31 using the indirect method. (Amounts to be deducted should be indicated by a minus sign.)
Audio City, Inc. is developing its annual financial statements at December 31. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized below:
Explanation / Answer
Cash flow for the year ended December 31
Particulars Notes Amount in $ Cash flow from operating activities Net income (given) 51,000 Add: Taxes (given) 26,000 Profit before taxes 77,000 Adjustments for : Add: Depriciation 16,000 Operating porofit before working capital changes : 93,000 Adjustments for : Add: decrease in trade receivable 5,200 Less: Increase in inventory (2,200) Less: decrease in account payable (11,200) Add: Increase in salary and wages payable 1,200 Cash generated from operating activity before taxes 86,000 Less:Taxes paid (26,000) Net Cash generated from operating activity (A) 60,000 Cash flow from Investing activies : Purchase of fixed equipment (75,000) Net cash used in investing activities (B) (75,000) Cash flow from finacing activies : New stock issued 32,000 Dividend Paid (5,200) Long term payable (16,000) Net cash from Financing activities (C) 10,800 Net decrease in cash and cash equivalents (A+B+C) (4,200) Add: opening balance of cash and cash equivilents (Given) 69,400 Closing balance of cash and cash equivilents 65,200Related Questions
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