Question

Q3.   Prepare a statement of cash flows from the following list of items.

Increase in inventories		22,000
Operating income		625,000
Dividends		55,000
Increase in accounts payables		92,500
Interest expense		118,000
Increase in common stock		22,000
Depreciation expense		48,000
Increase in accounts receivable		210,000
Increase in long-term debt		145,000
Increase in short-term notes payable		36,500
Increase in gross fixed assets		144,000
Increase in paid in capital		60,000
Income taxes		202,000
Beginning cash		700,000

Answer 1

INCOME STATEMENT

PARTICULARS	AMT($)
Operating Income (EBIT)	625,000
Less: Interest	(118,000)
Profit before Tax	507,000
less Tax	(202,000)
Net Income	305,000

CASH FLOW STATEMENT

PARTICULARS	AMOUNT($)	AMOUNT($)
NET INCOME		305,000
ADD: Depreciation	48,000
Change in Working Capital
increase in Account Payable	92,500
Increase in Short term Note Payable	36,500
Increase in Account Receivable	(210,000)	(33,000)
Net Cash flow from Operating Activities (A)		272,000
INVESTING ACTIVITY
Increase in gross Fixed Assets	(144,000)
Net Cash Flow From Investing Activities(B)		(144,000)
FINANCING ACTIVITY
Increase in Common Stock	22,000
Raise Long Term Debt	145,000
Paid in Capital	60,000
Dividend	(55,000)
Net Cash flow From Financing Activity(C)		172,000
CASH FLOW FROM ALL ACTIVITIES (A+B+C)		300,000
Cash at the beginning		700,000
Cash At the end		1,000,000