Required Prepare a cash flow statement for 2008 with clear documentation (i.e.,
ID: 2482707 • Letter: R
Question
Required
Prepare a cash flow statement for 2008 with clear documentation (i.e., show your work) for each section of the statement. Use either the direct or the indirect method.
Additional information
1.There were no write-offs of delinquent accounts during the year.
2.A building was sold during the year for $80.
Comparative balance sheets and an income statement for 2008 are presented below for Nroklesah Company.
Nroklesah Company
Comparative Balance Sheets and Income Statement
For the Years 2007 and 2008
BALANCE SHEETS
Assets 2008 2007
Cash 200 185
Accounts receivable 350 290
Allowance for bad debts (45) (25)
Inventory 260 135
Land 600 500
Buildings 295 250
Accumulated depreciation-buildings (65) (80)
Total assets 1,595 1,255
Liabilities & Owners’ Equity
Liabilities
Accounts payable 400 305
Wages payable 70 67
Dividends payable 30 47
Taxes payable 50 46
Long-term Bonds payable 100 100
Discount on bonds payable ( 8) (10)
Total liabilities 642 555
Owners’ Equity
Common stock 650 500
Retained earnings 303 200
Total owners’ equity 953 700
Total liabilities & owners’ equity 1,595 1,255
INCOME STATEMENT (2008)
Revenue 1,200
Cost of goods sold 750
Gross margin 450
Operating expenses
Wage expense 200
Depreciation expense 30
Bad debt expense 20
Bond interest expense 10
Total operating expenses 260
Net operating income 190
Gain on sale of building 40
Net income before tax 230
Income tax 69
Net income after tax 161
Explanation / Answer
Cash Flow Statement by Indirect Method :
Cash flow Statement for Nroklesah Company for 2008 $ $ Cash flow from operating activities Net Income 190.00 Adjustments for Depreciation & Amortization 30.00 Badt debt expense 20.00 Gain on sale of building (40.00) 10.00 Increase in Accounts Receivable (60.00) Increase in Inventory (125.00) Increase in accounts payable 95.00 Increase in wages payable 3.00 (87.00) Cash generated from operations 113.00 Cash flow from investing activities Sale of property 80.00 80.00 Cash flow from financing activities Decrease in dividends payable 17.00 Increase in taxes payable (4.00) Decrease in discount on bonds payable (2.00) Proceeds from issue of common stock 150.00 161.00 Net increase in cash & cash equivalents 354.00 Cash & Cash equivalents at the beginning of the period 185.00 Cash & Cash equivalents at the end of the period 539.00Related Questions
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