Jan, 2010Dec. 2010 Income Statement $633.000 125.000 252.000 89.000 -Net Income

Question

Jan, 2010Dec. 2010 Income Statement $633.000 125.000 252.000 89.000 -Net Income Depreciation Expense Amortization Expense Gain on sale of building Balance Sheet: Accounts Receivables Inventory Prepaid Expenses Accounts Payables $323.000 $292.000 558.000521.000 33.000 137.000187.000 82.000 17.000 - Income taxes payables 91.000 Additional information: Sold a building for $795.000 cash. Paid $100.000 dividend to stockholders Paid $85.000 as repayment of long-term debt. Collected the principal of a loan made to a borrower in the amount of $65.000. - Invested $235.000 in marketable securities. The balance of the cash account on January, 2010 was $361.000 Using the above information, prepare the statement of cash flows for the year ended December 31, 2010 showing the computation of the net cash flows from operating (by the indirect method), investing and financing activities

Explanation / Answer

Statement of Cash Flows For the Year Ended December 31, 2010 Cash Flows from Operating Activities Net income 633000 Adjustments to reconcile net income to net cash provided by operations: Depreciation expense 125000 Amortization expense 252000 Gain on sale of building -389000 Decrease in accounts receivable 31000 Decrease in inventory 37000 Increase in prepaid expenses -16000 Increase in accounts payable 50000 Decrease in income taxes payable -9000 81000 Net cash provided by operating activities 714000 Cash Flows from Investing Activities Proceeds from sale of building 795000 Loan principal collected from borrower 65000 Investment in marketable securities -235000 Net cash provided by investing activities 625000 Cash Flows from Financing Activities Repayment of long-term debt -85000 Payment of dividends -100000 Net cash used by financing activities -185000 Net increase (decrease) in cash 1154000 Cash balance, January, 2010 361000 Cash balance, December 2010 1515000

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