Required Prepare a cash flow statement for 2014 with clear documentation (i.e.,
ID: 2532629 • 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
Explanation / Answer
Solution:
Nroklesah Company Statement of Cash Flows (Indirect Method) For year ended 2014 Particulars Details Amount Cash Flow from Operating Activities: Net Income $329.00 Adjustments to reconcile net income to net cash provided by operations: Depreciation Expense $40.00 Bad debts expense $15.00 Gain on sale of building -$60.00 Premium on bond amortized ($10 - $7) -$3.00 Increase in accounts receivables ($350 - $300) -$50.00 Decrease in inventory ($135 - $100) $35.00 Decrease in accounts payable ($305 - $300) -$5.00 Increase in Wages payable ($70 - $60) $10.00 Increase in Income tax payable ($50 - $45) $5.00 Net Cash provided by operating activities $316.00 Cash Flow from Investing Activities: Sale of building $120.00 Purchase of Land ($600 - $500) -$100.00 Purchase of Building ($275 +$120 - $60 + $45 - $255) -$125.00 Net Cash Provided by Investing activities -$105.00 Cash Flow from Financing Activities: Proceed from issue of common stock $50.00 Dividend paid ($225 + $329 - $203 +$25 - $30) -$346.00 Net Cash Provided by financing activities -$296.00 Net Increase / (Decrease) in Cash -$85.00 Cash balance at beginning of year $285.00 Cash balance at end of year $200.00Related Questions
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