Problem from previous exam The following tables provide Income statement for 201

Question

Problem from previous exam The following tables provide Income statement for 2015 and partial balance-sheet of Federer Products Inc (FPI). Income statement of Federer Product Inc (FPI) for the year ended 12/31/2015 Revenue $1,200,000 Less: Cost of goods sold $500,000 Depreciation Expense 100,000 Wage expense 120,000 Insurance expense 50,000 Interest expense 40,000 Total operating expense s ( 810,000) Operating Income $ 390,000 Loss from sale of PPE (80,000) Income Tax (120,000) NET INCOME $ 190,000 Assets 12/31/2015 12/31/2014 Change Cash $ 113,000 $ 100,000 $ 13,000 Marketable securities $ 55,000 $ 43,000 $ 12,000 Accounts Receivable $ 40,000 $ 45,000 $ (5,000) Inventory $ 43,000 $ 40,000 $ 3,000 Pre-paid insurance $ 25,000 $ 23,000 $ 2,000 Liabilities Accounts Payable $ 18,000 $ 17,000 $ 1,000 Wages payable $ 3,000 $ 5,000 $ (2,000) Interest Payable $ 5,000 $ 5,000 $ 0 Tax Payable $ 12000 $ 14,000 $ (2,000) Dividend payable $ 1,500 $ 4,500 $ (3,000) The table above shows current assets and current liabilities of FPI. Required for FPI Company (a) What is the net operating cash flow for FPI for 2015? Calculate your answer using indirect method and write your answer in the box provided in Final exam answer sheet. (b) Provide any additional disclosure information that FPI must provide pertaining to cash flow from operating activities to meet US GAAP reporting requirements. Write it in the space below your answer to part (b).

Explanation / Answer

FEDERER PRODUCTS INC.

CASHFLOW FROM OPERATING ACTIVITIES (Indirect method) (UNDER US GAAP)

For the period 2014-2015

Net Income                                                                  $190,000

Adjustment for non-cash effect:

Depreciation                                                                $100,000

Loss on sale of PPE $80,000

Change in operating assets& Liabilites:

Increase in marketable securities                                 ($12,000)

Decrease in accounts receivable                                     $5,000

Increase in inventory                                                     ($3,000)

Increase in prepaid insurance                                        ($2,000)

Increase in accounts payable                                          $1,000

Decrease in wages payable                                            ($2,000)

Decrease in tax payable                                                 ($2,000)

Decrease in dividend payable ($3,000)

                                                                              ----------------------

Net cash flow from Operating Activities $352,000

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