The comparative unclassified statement of financial position for Puffy Ltd. foll

Question

The comparative unclassified statement of financial position for Puffy Ltd. follows: PUFFY LTD. Statement of Financal Position Assets Cash Accounts receivable Merchandise inventory Land Equipment Accumulated depreciation Total assets 2015 2014 $58,910 $21,540 70,440 182,130 187,670 70,500 100,110 263,300 201,530 66,620) _(31.650) $584,280 $549,640 76,060 Liabilities and Shareholders' Equity Accounts payable Bank loan payable Common shares Retained earnings Total liabilities and shareholders' equity $584,280$549,640 $38,080 46,610 140,420 196,240 201,430 174,390 204,350 132,400 Additional information: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Profit was $113,600 Sales were $977,410 Cost of goods sold was $752,230 Operating expenses were $42,250, exclusive of depreciation expense Depreciation expense was $34,970 Interest expense was $13,550 Income tax expense was $26,740 Land was sold at a gain of $5,930 No equipment was sold during the year $55,820 of the bank loan was repaid during the year Common shares were issued for $27,040 Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g.-15,000 or in parenthesis e.g. (15,000).)

Explanation / Answer

PUFFY LTD Statement of Cash flows -Indirect Method Year Ended December 31,2015 Cash flows from Operating activities: Net income          1,13,600 Adjustments to reconcile net income to net cash from operating activities : Depreciation              34,970 Gain on Sale of Land              -5,930 Increase in Accounts Receivable              -5,620 Decrease in Inventories                5,540 Decrease in Accounts Payable              -8,530              20,430 Net cash flow from operating activities          1,34,030 Cash flow form Investing activities Purchase of equipment            -61,770 Sale of land              35,540 Net cash flow used for investing activities            -26,230 Cash flow from Financing Activities Bank loan paid            -55,820 Dividends Paid            -41,650 Common Stock Issues              27,040 Net cash flow used for financing activities            -70,430 Net cash generated during the year              37,370 Cash at the beginning of the year              21,540 Cash at the end of the year              58,910 Note: Difference between Profit and increase in Retained is considered as dividends paid

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