Question

Selected financial information for the Bravo-Zulu Company for the fiscal year ended December 31, 2016 is as follows:

Net Income	$122,500
Depreciation Expense	50,000
Purchases of plant assets	125,000
Proceeds on Disposals of plant assets	20,000
Loss on Disposal of plant assets	7,500
Accounts receivable increased	2,500
Accounts payable decreased	4,000
Interest expense	5,000
Income tax expense	2,500

Additionally, Bravo-Zulu issued stock in exchange for an outstanding note payable of $72,500. The cash balance on January 1, 2016 was $37,000. The January 1, 2016 balance for Retained Earnings was $250,000 and the December 31, 2016 balance for Retained Earnings was $342,500. Use this information to prepare Bravo-Zulu Company's Statement of Cash Flows for the year ended December 31, 2016 using the indirect method.

Answer 1

Bravo- Zulu
Cash Flow Statement
For the Year Ended December 31, 2016
Cash Flow from Operating Activities:
Net Income		$    1,22,500.00
Adjustments to reconcile net loss to net cash flow from operating activities
Loss on Disposal of plant assets	$          7,500.00
Depreciation expense	$        50,000.00
Changes in current operating assets and liabilities:
Decrease in accounts payable	$        (4,000.00)
Increase in Accounts receivables	$        (2,500.00)
		$        51,000.00
A. Cash Flow from Operating Activities		$    1,73,500.00
Proceeds on disposal of plant assets	$        20,000.00
Purchase of Plant assets	$ (1,25,000.00)
B. Cash flow from Investing Activities		$ (1,05,000.00)
Cash Flow from Financing Activities:
Dividend paid	$     (30,000.00)
C. Cash Flow from Financing Activities		$     (30,000.00)
Increase (Decrease) in cash [A+B+C]		$        38,500.00
Add: cash at the beginning of the year		$        37,000.00
Cash at the end of the year		$        75,500.00