Statement of Cash Flows—Indirect Method The income statement for Nebula Company

Question

Statement of Cash Flows—Indirect Method

The income statement for Nebula Company for 2014 is as follows:

Other information is as follows:

Dividends of $43,000 were declared and paid during the year.

Operating expenses include $70,000 of depreciation.

Land and plant and equipment were acquired for cash, and additional stock was issued for cash. Cash also was received from additional bank loans.

The president has asked you some questions about the year's results. He is disturbed with the $92,000 net loss for the year. He notes, however, that the cash position at the end of the year is improved. He is confused about what appear to be conflicting signals: "How could we have possibly added to our bank accounts during such a terrible year of operations?"

Required:

Prepare a statement of cash flows for 2014 using the indirect method in the Operating Activities section. Use the minus sign to indicate net loss, cash payments, cash outflows, or decreases in cash.

Nebula Company

Statement of Cash Flows

For The Year Ended December 31, 2014

Cash Flows from Operating Activities

  

$  

Adjustments to reconcile net income to net cash provided by operating activities:

  

$  

  

  

  

  

  

  

  

  

  

  

  

  

  

$  

Cash Flows from Investing Activities

  

$  

  

  

  

$  

Cash Flows from Financing Activities

  

$  

  

  

  

  

  

$  

  

$  

Cash balance, December 31, 2013

  

Cash balance, December 31, 2014

$  

For the Year Ended December 31, 2014 Sales revenue $ 500,000 Cost of goods sold 400,000 Gross profit $100,000 Operating expenses 180,000 Loss before interest and taxes $(80,000) Interest expense 12,000 Net loss $(92,000)

Explanation / Answer

For the year ended on December 31, 2016 ($ in thousands) Cash Flow from Operating Activities $ $ $ Net Income -92000 Adjustments to reconcile net income to net cash provided by operating activities Add: Depreciation 70000 Add: Increase in liabilities and decrease in current assets decrease in accounts receivable (75000-50000) 25000 Decrease in inventory (150000 - 100000) 50000 Increase in accounts payable(125000-100000) 25000 Increase in interest payable (15000-10000) 5000 Less: increase in current asets and decrease in current liabilities Increase in prepayments (55000-45000) -10000 Decrease in other accrued liabilities (45000-35000) -10000 155000 Net cash flor from operating activities 63000 Cash Flows from Investing Activities Purchase of land (475000-400000) -75000 Purchase of plant and equipment (870000-800000) -70000 Net cash flow from investing activities -145000 Cash flow from financing activities Long term loan raised (340000 - 250000) 90000 Issue of common stock (450000 - 400000) 50000 Dividend paid -43000 Net Cash Flow from Financing activities 97000 Total cash flow 15000 Add: beginning cash balance 80000 Ending Cash Balance 95000

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.