The following are several items involving the cash flow activities of the ROCKY

ID: 2537855 • Letter: T

Question

The following are several items involving the cash flow activities of the ROCKY HORROR PICTURE CO. for 2016:

Net income, $55900

Payment of dividends, $14200

Ten-year, $30700 bonds payable were issued at face value

Depreciation expense, $19300

Building was acquired at a cost of $32300

Accounts receivable decreased by $3000

Accounts payable decreased by $4400

Equipment was acquired at a cost of $5400

Inventories increased by $6700

Beginning cash balance, $15200

Required:

Prepare Rocky Horror Picture's statement of cash flows for 2016 using the indirect method. Use a minus sign for any negative amounts.

Ans)

Rocky Horror Picture Co.

Statement of Cash Flows

For year ended Dec 31,2016

Net cash from operating activities:

Net revenue $55,900

Adjustments for differences between net income:

Add: Depreciation expense $19,300

Decrease in accounts receivable 3000

Less: Decrease in accounts payable (4400)

Increase in inventory (6700)

Net cash flow from operating activities 67,100

Investing Activities:

Payment of purchase of building (32,300)

Payment of purchase of equipment (5400)

Net cash flow from investing activities (37,700)

Financing Activities:

Payment of dividends (14,200)

Receipt from issuance of commonstock 30,700

Net cash flow from financing activities 16,500

Net increase in cash 45900

Cash, Jan 1, 2016 15,200

Cash Dec 31, 2016 61,100

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