Question

XS supply company is developing its annual financial statement at December 31,2017. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized

Particulars	2017	2018
Balance sheet at December 31
Cash	$ 50,720	$ 34,800
Accounts Receivable	42,850	36,100
Merchandise Inventory	49,750	43,700
Property & Equipment	1,64,000	1,38,000
Less : Accumulated Depreciation	(39,600)	(34,500)
	2,67,720	2,18,100
Accounts Payable	40,050	30,700
Wages Payable	1,910	2,400
Note Payable,Long term	40,200	52,900
Contributed Capital	1,08,000	82,100
Retained Earnings	77,560	50,000
	2,67,720	2,18,100

 

Income statement for 2017
Sales	$ 1,65,500
Cost of goods sold	95,990
Other Expenses	41,950
Net Income	$27,560

Additional Data:

a.Bought equipment for cash $26,000

b.Paid $12,700 on the long term note payable

c.Issued new shares for $25,900 cash

d.No Dividends were declared or paid.

e.Other expenses included depreciation $5,100,Wages $22,600 taxes $7,150,other $7,100

f.Accounts Payable includes only inventory purchase made on credit.Because there are no liability relating to taxes or other expenses,assume that these expenses were fully paid in cash

Required:

1.Prepare the statement of cash flows for the year ended December 31,2017 using the indirect method

 

Answer 1

XS Supply Company

Statement of cash flows

For the year ended  December 31,2017

Particulars	Amount$	Amount$
Cash flows from operating activities
Net income		27,560
Adjustments to reconcile to net cash provided by operating activities
Deprecation expenses (39,600 - 34,500)	5,100
Less : Increase in accounts receivable (42,850 -36,100)	-6,750
Less : increase in inventory (49,750 - 43,700)	-6,050
Increase in accounts payable (40,050 - 30,700)	9,350
Less : Decrease in salaries & wages Payable (2,400 - 1,910)	-490	1,160
Net cash provide by operating activities		28,720
Cash flow from investing activities
Less : Cash payments to purchase equipment	-26,000
Net cash used by investing activities		-26,000
Cash flow from financing activities
Less : Cash payments on long term note	-12,700
Cash receipts from issuing stock	25,900
Net cash provided by financing activities		13,200
Net increase in cash during the year		15,920
Cash balance at the beginning year 2016		34,800
Cash balance at the ending year 2016		50,720

Cash balance at the ending year 2017is $50,720