Using the data provided, prepare a complete Statement of Cash Flows using both t
ID: 2741690 • Letter: U
Question
Using the data provided, prepare a complete Statement of Cash Flows using both the direct and the indirect method of determining the cash flow from operating activities. Note that to complete the assignment you will need to calculate items such as dividends paid (Retained Earnings2014 + Net income2015 – Retained Earnings2015 = Dividends paid2015), and fixed asset acquisitions (Net Fixed Assets2014 – Net Book Value of Fixed Assets Sold2015 – Depreciation Expense2015 – Net Fixed Assets2015 = New fixed assets acquired2015.
Assets
2015
2014
Sales
$90,478
Cash
$1,498
$1,234
Less: Cost of goods sold
46,924
Accounts receivable
8,128
7,955
Gross profit
43,554
Inventories
15,842
16,298
Less: Cash operating expenses
19,980
Other current assets
8,032
7,933
Depreciation expense
5,038
Total current assets
33,500
33,420
Amortization expense
783
Gross fixed assets
73,502
70,545
Operating income (EBIT)
17,753
Accumulated depreciation
(39,845)
(38,923)
Less: Interest expense
2,678
Net fixed assets
33,657
31,622
Equity in earnings (loss) of affiliate
678
Investment in affiliates
3,785
3,107
Gain (loss) on sale of fixed assets
(649)
Intangible assets
13,073
13,856
Earnings before taxes
15,104
Other noncurrent assets
3,793
3,590
Less: Tax expense
5,111
Total assets
$87,808
$85,595
Net income
$9,993
Liabilities and Equity
Accounts payable
5,738
5,985
Accrued expenses
7,346
6,895
Current maturities of LT debt
4,032
3,786
Short-term debt
1,665
1,921
Deferred revenue
1,188
976
Other current liabilities
681
757
Total current liabilities
20,650
20,320
Long-term debt
22,755
23,374
Deferred income taxes
3,882
4,115
Other noncurrent liabilities
8,486
7,982
Total liabilities
55,773
55,791
Common stock
35
25
Additional paid-in capital
9,813
9,466
Retained earnings
22,187
20,313
Total equity
32,035
29,804
Total liabilities and equity
$87,808
$85,595
Footnote
During the year, the company received cash of $1,525 when it sold fixed assets that had a stated net book value of $2,174, which gave rise to the $649 loss that appears on the income statement.
.
Note: Check figure for cash flow from operations = $16,377.
Assets
2015
2014
Sales
$90,478
Cash
$1,498
$1,234
Less: Cost of goods sold
46,924
Accounts receivable
8,128
7,955
Gross profit
43,554
Inventories
15,842
16,298
Less: Cash operating expenses
19,980
Other current assets
8,032
7,933
Depreciation expense
5,038
Total current assets
33,500
33,420
Amortization expense
783
Gross fixed assets
73,502
70,545
Operating income (EBIT)
17,753
Accumulated depreciation
(39,845)
(38,923)
Less: Interest expense
2,678
Net fixed assets
33,657
31,622
Equity in earnings (loss) of affiliate
678
Investment in affiliates
3,785
3,107
Gain (loss) on sale of fixed assets
(649)
Intangible assets
13,073
13,856
Earnings before taxes
15,104
Other noncurrent assets
3,793
3,590
Less: Tax expense
5,111
Total assets
$87,808
$85,595
Net income
$9,993
Liabilities and Equity
Accounts payable
5,738
5,985
Accrued expenses
7,346
6,895
Current maturities of LT debt
4,032
3,786
Short-term debt
1,665
1,921
Deferred revenue
1,188
976
Other current liabilities
681
757
Total current liabilities
20,650
20,320
Long-term debt
22,755
23,374
Deferred income taxes
3,882
4,115
Other noncurrent liabilities
8,486
7,982
Total liabilities
55,773
55,791
Common stock
35
25
Additional paid-in capital
9,813
9,466
Retained earnings
22,187
20,313
Total equity
32,035
29,804
Total liabilities and equity
$87,808
$85,595
Explanation / Answer
STATEMENT OF CASH FLOWS (INDIRECT METHOD) Cash flow from operating activities: Net Income 9993 Adjustments to net income to arrive at cash flows from operating activities Depreciation expense 5038 Amortization expense 783 Deferred revenue expenditure 212 Equity in earnings of affiliate -678 Loss on sale of fixed assets 649 Increase in accounts receivable -173 Decrease in inventories 456 Decrease in short term debt -256 Decrease in other current liabilities -76 Increase in other current assets -99 Credit taken for deferred taxes -233 Decrease in accounts payable -247 Increase in accrued expenses 451 5827 Net cash from operating activities 15820 Cash flow from investing activities: Sales of fixed assets 1525 Purchase of fixed assets -9247 Increase in other non current assets -203 Net cash used in investing activities -7925 Cash flow from financing activities: Repayment of LT debt -373 Increase in other non current liabilities 504 Common stock -8119 Increase in common stock 10 Increase in additional paid in capital 347 Net cash from investing activities -7631 Increase in cash and cash equivalents 264 Beginning balance of cash & equivalents 1234 Ending balance of cash & equivalents 1498 Cash flow from operating activities-(Direct Method) Receipts from customers 90305 Payments towards cost of goods sold -46715 Payments towards operating expenses -19393 Repayment of short term debt -256 Increase in other current assets -99 Taxes paid -5344 Interest paid -2678 15820
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