Exercise 4: Emerald, Inc. had the follwing information at December 31,2010. Emer
ID: 2579192 • Letter: E
Question
Exercise 4: Emerald, Inc. had the follwing information at December 31,2010. Emerald, Inc. Balance Sheet (in thousands) December 31,2010 and 2009 Liabilities Assets 2010 2009 Cash Accounts receivable Inventory Prepaid advertisement Land $150 $200 Accounts payable $275 $300 2010 2009 300 150 Salary payable 500 250 Notes payable 25 800 50 650 25 1,000 1000 Owners' Equity Common stock 100 85 Retained earnings 800 Total Assets $ 2,000 $ 1625 Total L. & OF $2,000 1625 Emerald, Inc. Income Statement (in thousands) Year ended December 31,2010 Sales Cost of goods sold Gross profit Salary expenses Interest expenses Other expenses Income tax expenses Net income $ 2.500 1300 $1,200 500 70 295 75 $ 260 Requirement: Using the indirect method, prepare the statement of cash flows for Emerald, Inc. for the year 2010.Explanation / Answer
Cash Flow Statement
Particulars
Amount
Total Amount
Cash Flow from Operating Activities
Net Income
260
Add: Items for cash basis
Accounts Receivable (Increase)
(150)
Inventory(Increase)
(250)
Prepaid Expenses(Increase)
(25)
Accounts Payable (Decrease)
(25)
Salary Payable (Decrease)
(25)
Notes Payable
150
Cash Flow provided by operating activities
(65)
Cash Flow from Investing Activates
0
Cash Flow from Financing Activity
Common Stock
15
Cash provided by Financing activities
15
Net outflow of Cash
(50)
Cash at the Beginning of year
200
Cash at end of year
150
Particulars
Amount
Total Amount
Cash Flow from Operating Activities
Net Income
260
Add: Items for cash basis
Accounts Receivable (Increase)
(150)
Inventory(Increase)
(250)
Prepaid Expenses(Increase)
(25)
Accounts Payable (Decrease)
(25)
Salary Payable (Decrease)
(25)
Notes Payable
150
Cash Flow provided by operating activities
(65)
Cash Flow from Investing Activates
0
Cash Flow from Financing Activity
Common Stock
15
Cash provided by Financing activities
15
Net outflow of Cash
(50)
Cash at the Beginning of year
200
Cash at end of year
150
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