Presented below are the 2016 income statement and comparative balance sheets for
ID: 2337726 • Letter: P
Question
Presented below are the 2016 income statement and comparative balance sheets for Santana Industries. SANTANA INDUSTRIES Income Statement For the Year Ended December 31, 2016 $ in thousands) 15,650 Sales revenue Service revenue 4,800 20,450 Total revenue Operating expenses: Cost of goods sold Selling General and administrative2,200 7,900 3,100 13,200 Total operating expenses Operating income Interest expense 7250 270 Income before income taxes Income tax expense 6,980 3,200 Net income $3,780 10:3 Next>Explanation / Answer
SANTANA INDUSTRIES
Statement of Cash flows
For the year ended December 31 2016
($ in thousands)
A. Cash Flows from Operating Activity
Net Income
$ 3,780.00
Adjustments to reconcile net income to net cash flows from operating activities
Depreciation expense
$ 2,300.00
Decrease in income taxes payable
$ -320.00
Increase in Accounts receivables
$ -1,000.00
Increase in Accounts payables
$ 1,000.00
Increase in Inventory
$ -1,700.00
Decrease In Prepaid Expenses
$ 220.00
Increase in Interest payable
$ 170.00
Increase in differed service revenue
$ 270.00
$ 940.00
Net cash flow from Operating activities
$ 4,720.00
B. Cash flows from Investing Activities
Purchase of Equipment
$ (5,400.00
Sale of Equipment
$ 1,200.00
Net Cash flows from Investing activities
$ -4,200.00
C. Cash Flows from Financing activities
Proceeds from loan
$ 6,400.00
payments of dividends
$ -1,700.00
Cash flows from Financing activities
$ 4,700.00
Net Increase (Decrease) in Cash [A+B+C]
$ 5,220.00
Cash at the beginning of the period
$ 2,830.00
Cash at the end of the period
$ 8,050.00
Note:
Depreciation is a non cash Expense that is why it is added back to Operating profit to calculated cash generated from operations.
When Current asset Increase or Current Liability Decrease this means that cash is used.
When Current asset Decrease or Current Liability Increase this means that cash has been saved and hence added to cash from Operations. .
SANTANA INDUSTRIES
Statement of Cash flows
For the year ended December 31 2016
($ in thousands)
A. Cash Flows from Operating Activity
Net Income
$ 3,780.00
Adjustments to reconcile net income to net cash flows from operating activities
Depreciation expense
$ 2,300.00
Decrease in income taxes payable
$ -320.00
Increase in Accounts receivables
$ -1,000.00
Increase in Accounts payables
$ 1,000.00
Increase in Inventory
$ -1,700.00
Decrease In Prepaid Expenses
$ 220.00
Increase in Interest payable
$ 170.00
Increase in differed service revenue
$ 270.00
$ 940.00
Net cash flow from Operating activities
$ 4,720.00
B. Cash flows from Investing Activities
Purchase of Equipment
$ (5,400.00
Sale of Equipment
$ 1,200.00
Net Cash flows from Investing activities
$ -4,200.00
C. Cash Flows from Financing activities
Proceeds from loan
$ 6,400.00
payments of dividends
$ -1,700.00
Cash flows from Financing activities
$ 4,700.00
Net Increase (Decrease) in Cash [A+B+C]
$ 5,220.00
Cash at the beginning of the period
$ 2,830.00
Cash at the end of the period
$ 8,050.00
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