Statement of Cash Flows Using a Work Sheet—Indirect Method (Appendix) Peoria Cor

Question

Statement of Cash Flows Using a Work Sheet—Indirect Method (Appendix)

Peoria Corp. just completed another successful year, as indicated by the following income statement:

Presented here are comparative balance sheets:

Other information is as follows:

Dividends of $62,246 were declared and paid during the year.

Operating expenses include $50,380 of depreciation.

Land and plant and equipment were acquired for cash, and additional stock was issued for cash. Cash also was received from additional bank loans.

The president has asked you some questions about the year's results. She is very impressed with the profit margin of 18.16% (net income divided by sales revenue). She is bothered, however, by the decline in the company's cash balance during the year. One of the conditions of the existing bank loan is that the company maintain a minimum cash balance of $50,380.

Required:

1. Using the format in the chapter's appendix, prepare a statement of cash flows work sheet. If an amount box does not require an entry, leave it blank.

For the Year Ended
December 31, 2014

Explanation / Answer

Answer:

Cash Flow Statement Particulars Amount Cash Flow from operating Activities Net income 165070 Add: Dep 50380 Inc in accounts Receivable -50280 Inc in inventory -27380 Dec in prepayments 10510 Dec in accounts payable -21330 Inc in accrued liabilities 6570 Dividend paid 62246 Dec in income tax payable -19180 Cash Flow from operating Activities 176606 Cash flow from investing activities: Purchase of land -149890 Purchase of plant and equipment -203600 Cash flow of investing activities -353490 Cash flow from financing activities: Issue of long term bank loan 50720 Issue of common stock 149660 Dividend paid -62246 Cash flow from financing activities: 138134 Net cash flow from all activities -38750 Add: opening cash 91690 Closing cash 52940

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