3. Below is financial information extracted from financial statements for KHLED
ID: 2526011 • Letter: 3
Question
3. Below is financial information extracted from financial statements for KHLED Inc. for 2016.
items
Amounts in thousands of Saudi Riyal
Net in come
200
Depreciation expense
15
Increase in accounts receivable
35
Decrease in inventory
30
Increase in accounts payable
20
Proceeds from sale of land
50
Purchases of equipment
20
Proceeds from issuance of common stock
40
Cash dividends
5
Cash, January 1, 2016
100
Required: Prepare cash flow statement for KHALED Inc. for 2016 using indirect method.
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items
Amounts in thousands of Saudi Riyal
Net in come
200
Depreciation expense
15
Increase in accounts receivable
35
Decrease in inventory
30
Increase in accounts payable
20
Proceeds from sale of land
50
Purchases of equipment
20
Proceeds from issuance of common stock
40
Cash dividends
5
Cash, January 1, 2016
100
Explanation / Answer
Solution:
KHLED Inc.
Statement of cash flow
For the year ended December 31,2016
A. CASH FLOW FROM OPERATING ACTIVITY
Net in come
200
Adjustments to reconcile net income
Add: Depreciation expense
15
Add: Decrease in inventory
30
Add: Increase in accounts payable
20
Less: Increase in accounts receivable
(35)
30
Net cash provided by operating activity
230
B. CASH FLOW FROM INVESTING ACTIVITY
Proceeds from sale of land
50
Purchases of equipment (Outflow)
(20)
Net cash provided by investing activity
30
C. CASH FLOW FROM FINANCING ACTIVITY
Proceeds from issuance of common stock
40
Cash dividends (Outflow)
(5)
Net cash provided by financing activity
35
Net Increase in cash (A +B+C)
295
Add: Cash, January 1, 2016
100
Cash, December 31, 2016
395
KHLED Inc.
Statement of cash flow
For the year ended December 31,2016
A. CASH FLOW FROM OPERATING ACTIVITY
Net in come
200
Adjustments to reconcile net income
Add: Depreciation expense
15
Add: Decrease in inventory
30
Add: Increase in accounts payable
20
Less: Increase in accounts receivable
(35)
30
Net cash provided by operating activity
230
B. CASH FLOW FROM INVESTING ACTIVITY
Proceeds from sale of land
50
Purchases of equipment (Outflow)
(20)
Net cash provided by investing activity
30
C. CASH FLOW FROM FINANCING ACTIVITY
Proceeds from issuance of common stock
40
Cash dividends (Outflow)
(5)
Net cash provided by financing activity
35
Net Increase in cash (A +B+C)
295
Add: Cash, January 1, 2016
100
Cash, December 31, 2016
395
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