Question

Statement of Cash Flows

Zowine Company's condensed income statement for the year ended December 31, 20-2, was as follows:

Net sales	$760,800
Cost of goods sold	548,500
Gross profit	$212,300
Operating expenses	30,400
Income before taxes	$181,900
Income tax expense	63,665
Net income	$118,235

Additional information obtained from Zowine's comparative balance sheets as of December 31, 20-2 and 20-1, was as follows:

	20-2		20-1
Cash		$65,435		$19,100
Accounts receivable		70,100		101,200
Merchandise inventory		93,000		134,400
Accounts payable		49,800		83,300

The following additional information was obtained from Zowine's financial statements and auxiliary records for the year ended December 31, 20-2:

Acquired a new warehouse	$118,400
Bought new warehouse equipment	77,100
Issued a note to the bank	41,500
Issued additional common stock:
Par value	50,400
Paid-in capital in excess of par	21,700
Declared and paid cash dividends	29,000

Required:

Prepare a statement of cash flows for Zowine for the year ended December 31, 20-2. Use a minus to indicate any decreases in cash or cash outflowsPrepare a statement of cash flows for Zowine for the year ended December 31, 20-2. Use a minus to indicate any decreases in cash or cash outflows.

Zowine Company
Statement of Cash Flows
For Year Ended December 31, 20-2
Cash flows from operating activities:
	$
Adjustments for changes in current assets and liabilities related to operating activities:
Net cash provided by operating activities		$
Cash flows from investing activities:
	$
Total cash used by investing activities
Cash flows from financing activities:
	$
Net cash provided by financing activities
		$
Cash, January 1, 20-2
Cash, December 31, 20-2		$

Answer 1

Zowine Company
Cash Flow Statement
For year ended December 31, 20-2
A. Cash Flows from Operating Activity
Net Income		$      1,18,235.00
Adjustments to reconcile net income to net cash flow from operating activities:
Decrease in Accounts receivables	$        31,100.00
Decrease in Accounts payables	$      (33,500.00)
Decrease in Inventory	$        41,400.00
		$          39,000.00
Net cash flow from Operating activities		$      1,57,235.00
B. Cash flows from Investing Activities
Purchase of new warehouse	$ (1,18,400.00)
Purchase of warehouse Equipment	$      (77,100.00)
Net cash flow used for investing activities		$    (1,95,500.00)
C. Cash Flows from Financing activities
Proceeds from notes payable	$        41,500.00
Proceeds from Common stock	$        72,100.00
Payment of Dividends	$      (29,000.00)
Cash flows from Financing activities		$          84,600.00
Net Increase (Decrease) in Cash [A+B+C]		$          46,335.00
Cash at the beginning		$          19,100.00
Cash at the end		$          65,435.00