Below are the condensed balance sheet and income statement for the Beltway Compa

Question

Below are the condensed balance sheet and income statement for the Beltway Company, Inc. Assuming there were no disposals of fixed assets during the year 2018, provide a statement of cash flows using the indirect method for the year ended December 31, 2018.

Condensed balance sheet December 31, 2018 2017 2018 Assets: Current assets Cash $ 8 $ 15 Accounts receivable 53 58 Inventory 52 40 Prepaid insurance 5 3 Property plant and equipment 140 150 Accumulated depreciation (45 ) (55 ) Net PP&E 95 95 Total assets $ 213 $ 211 Liabilities: Accounts payable $ 35 21 Wages payable 12 16 Interest payable 5 2 Taxes payable 3 4 Long-term debt 92 92 Equity: Common stock 50 50 Retained earnings 16 26 Total liabilities and equity $ 213 $ 211

Explanation / Answer

Beltway Company Inc. Statement of Cash flow using Indirect Method Cash flow from Operating Activities Net Income $10 Depreciation $10 Adjusments relating to Working capital items : Increase in Accounts Receivable -$5 Decrease in merchandise inventory $12 Decrease in prepaid insurance $2 Decrease in Accounts Payable -$14 Increase in Wages Payable $4 Decrease in Interest payable -$3 Increase in Taxes Payable $1 Net Cash Available from Operating activities $17 Cash flow from Investing Activities Purchase of Property Plant and Equipment -$10 Net cash used for Investing activities -$10 Cash flow from Financing activities $0 Net Cash used for Financing activities $0 Net Cash surplus / (deficit) $7 Add: Beginning Cash balance as on 2017 $8 Ending cash balance as on 2018 $15

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