Exercise 13-12 (Indirect Method) The comparative unclassified statement of finan

Question

Exercise 13-12 (Indirect Method) The comparative unclassified statement of financial position for Puffy Ltd. follows PUFFY LTD. Statement of Financial Position December 31 2015 2014 Cash Accounts receivable Merchandise inventory Land Equipment Accumulated depreciation Total assets 53,200 24,540 70,830 188,460 194,100 70,960 101,100 260,770 204,210 75,150 (65,960)(30,090) $582,580 $564,690 Liabilities and Shareholders' Equity Accounts payable Bank loan payable Common shares Retained earnings Total liabilities and shareholders' equity $582,580 $564,690 $38,720 $46,850 140,240 210,260 202,740 173,250 200,880 134,330 Additional information 1. 2. 3. 4. S. 6. 7. 8. 9. 10. 11. Profit was $112,470 Sales were $976,170 Cost of goods sold was $750,950 Operating expenses were $42,410, exclusive of depreciation expense Depreciation expense was $35,870 Interest expense was $13,060 Income tax expense was $25,740 Land was sold at a gain of $4,330 No equipment was sold during the year $70,020 of the bank loan was repaid during the year Common shares were issued for $29,490. Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a-sign e.g. -15,000 or in parenthesis eg. (15,000).) PUFFY LTD. Statement of Cash Method Year Ended December 31, 2015 Adjustments to reconcile profit to

Explanation / Answer

PUFFY LTD. Statement of Cash Flows (indirect method) Year ended Dec 31, 2015 Amount $ Operating Activities Net Income 1,12,470 Adjustments: Non-Cash adjustment: Depreciation 35,870 Gain on sale of land                          -4,330 Due to changes in Working capital Due to changes in accounts receivable -4,320 Due to changes in Inventories                            5,640 Due to changes in accounts payable                          -8,130 Net Cash provided (used) by operating activities                      1,37,200 Investing Activities Cash used to acquire gross fixed assets (260770-204210)                        -56,560 receipts from sale of land (101100-70960+4330)                          34,470 Net cash provided (used) by investing activities                        -22,090 Financing Activities Due to change in bank loan payable (140240-210260)                        -70,020 Due to change in common stock (202740-173250)                          29,490 Payment of common dividends (134330+112470-200880)                        -45,920 Net cash provided (used) by investing activities)                        -86,450 Net increase/decrease in cash                          28,660 Add: Cash balance at the begining of the year                          24,540 Cash balance at the end of the year                          53,200

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