The income statement of Dillon Company is presented here. DILLON COMPANY Income
ID: 2355758 • Letter: T
Question
The income statement of Dillon Company is presented here. DILLON COMPANY Income Statement For the Year Ended November 30, 2011 Sales $7,709,200 Cost of goods sold Beginning inventory $1,915,700 Purchases 4,444,200 Goods available for sale 6,359,900 Ending inventory 1,430,900 Total cost of goods sold 4,929,000 Gross profit 2,780,200 Operating expenses Selling expenses 446,040 Administrative expenses 768,180 1,214,220 Net income $1,565,980 Additional information: Accounts receivable increased $246,160 during the year, and inventory decreased $484,800. Prepaid expenses increased $152,480 during the year. Accounts payable to suppliers of merchandise decreased $338,400 during the year. Accrued expenses payable decreased $101,790 during the year. Operating expenses include depreciation expense of $87,000. Prepare the operating activities section of the statement of cash flows for the year ended November 30, 2011, for Dillon Company, using the indirect method. (List amounts from largest positive to smallest positive followed by most negative to least negative, e.g. 15, 14, 10, -17, -5, -1. If amount decreases cash flow, use either a negative sign preceding the number eg. -45 or parentheses eg (45).) Cash flows from operating activities $ Adjustments to reconcile net income to net cash provided by operating activities $ Net cash provided by operating activities $Explanation / Answer
Net income $103,000 Adjustments for Depreciation $34,000 Changes in working capital- Increase in Accounts receivable ($9,000) Decrease in Inventories $19,000 Decrease in Accounts payable ($8,000) ..Net cash generated from operating activities $139,000 Investing activities Purchase of equipment ($60,000) Proceeds from sale of land $25,000 ..Net cash used in investing activities ($35,000) Financing activities Proceeds from issuance of common stock $42,000 Redemption of bonds ($50,000) Payment of dividends ($45,000) ..Net cash used in financing activities ($53,000) Net increase in cash & cash equivalents $51,000 CCE at beginning of year $22,000 CCE at end of year $73,000
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