Question 1 Using the income statement and balance sheets of Tullamarine Corporat

Question

Question 1 Using the income statement and balance sheets of Tullamarine Corporation below prepare a statement of cash flows for the year ended 2016 using the indirect method. Balance Sheets Cash Accounts receivable, net Inventory Total current assets 2015 50 500 750 1,300 2016 60 520 770 1,350 Fixed assets, net Total assets 500 1,800 550 1,900 Notes payable to banks Accounts payable Interest payable Total current liabilities 100 590 10 700 75 615 20 710 Long-term debt Deferred income tax Capital stock Retained earnings Total liabilities and equity 300 300 400 100 1,800 350 310 400 130 1,900 Income Statement Sales COGS Depreciation SG&A; Interest expense Income tax expense Net income 2016 1,000 650 100 100 50 40 60 (25 marks)

Explanation / Answer

Cash flows from operating activities Net income before tax 60 Adjustments for: Openning Fixed assets 500 Depreciation and amortization 100 Less: depreciation 100 Income tax paid 30 Net value 400 Increase in trade receivables -20 Closing fixed assets 550 Increase in Inventory -20 Increase -150 Decrease in Note payable -25 Increase in accounts payable 25 Cash generated from operations 150 Cash flows from investing activities Purchase of property, plant, and equipment -150 Openning Deferred tax 300 Net cash used in investing activities -150 Add: current year tax 40 Net value 340 Cash flows from financing activities Clsoing 310 Proceeds from issuance of long-term debt 50 Income tax payable 30 Interest paid -40 Net cash used in financing activities 10 Openning Int payable 10 Net increase in cash and cash equivalents 10 Add: current year tax 50 Cash and cash equivalents at beginning of period 50 Net value 60 Cash and cash equivalents at end of period 60 Clsoing 20 Interest paid 40

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