Question

Statement of Cash Flows The following items involve the cash flow activities of Rocky Horror Picture Co.: Net income, $42,800 Payment of dividends, $16,000 Ten-year, $33,000 bonds payable were issued at face value Depreciation expense, $24,500 Building acquired at a cost of $33,400 Accounts receivable decreased by $3,600 Accounts payable decreased by $4,700 Equipment acquired at a cost of $8,000 Inventories increased by $5,800 Beginning cash balance, $17,700 Required: Prepare Rocky Horror Picture’s statement of cash flows using the indirect method. ROCKY HORROR PICTURE CO. Statement of Cash Flows For Year Ended December 31, Current Year Operating Activities:

Answer 1

ROCKY HORROR PICTURE CO.

CASH FLOW STATEMENT FOR THE YEAR ENDED 31 ST DECEMBER

Operating Cash Flow
Net Earnings		42,800
Plus: Depreciation & Amortization	inflow	24,500
Adjust Changes in Working Capital
decrease in acoount receivable	inflow	3,600
decrease in account payable	outflow	(4,700)
increase in inventory	outflow	(5,800)
Cash from Operations (A)		60,400
Investing Cash Flow
building purchased	outflow	(33,400)
purchase of Equipment	outflow	(8,000)
Cash from Investing (B)		(41,400)
Financing Cash Flow
Issuance (issue) of bond	inflow	33,000
payment of dividend	out flow	(16,000)
Cash from Financing(C)		17,000
Net Increase (decrease) in Cash(A+B+C)	inflow	36000
Opening Cash Balance		17,700
Closing Cash Balance ( net increase +opening balnce)		53,700