Question

In: Accounting

Burns Corporation's net income last year was $96,500. Changes in the company's balance sheet accounts for...

Burns Corporation's net income last year was $96,500. Changes in the company's balance sheet accounts for the year appear below:

Increases
(Decreases)
Asset and Contra-Asset Accounts:
Cash and cash equivalents $ 18,600
Accounts receivable $ 13,300
Inventory $ (16,300 )
Prepaid expenses $ 4,300
Long-term investments $ 10,300
Property, plant, and equipment $ 74,200
Accumulated depreciation $ 31,600
Liability and Equity Accounts:
Accounts payable $ (19,400 )
Accrued liabilities $ 17,600
Income taxes payable $ 4,200
Bonds payable $ (63,600 )
Common stock $ 41,600
Retained earnings $ 92,400

The company did not dispose of any property, plant, and equipment, sell any long-term investments, issue any bonds payable, or repurchase any of its own common stock during the year. The company declared and paid a cash dividend of $4,100.

Required:

a. Prepare the operating activities section of the company's statement of cash flows for the year. (Use the indirect method.)

b. Prepare the investing activities section of the company's statement of cash flows for the year.

c. Prepare the financing activities section of the company's statement of cash flows for the year.

Solutions

Expert Solution

Answer:-a)- The operating activities section of the company's statement of cash flows for the year,(using the indirect method.)=$129200

b)- The investing activities section of the company's statement of cash flows for the year= -$84500

c)- The financing activities section of the company's statement of cash flows for the year= -$26100

Explanation:-

Burns Corporation
Statement of Cash Flow (Using Indirect Method)
For the year ended
Particulars Amount
$  
Cash flow from opreating activities
Net Income 96500
Adjustments to reconcile net income to net cash provided by opreating activities
Adjustment for non cash effects
Depreciation 31600
Change in opreating assets & liabilities
Increase in accounts receiveble -13300
Decrease in inventory 16300
Increase in prepaid expenses -4300
Decrease in accounts payable -19400
Increase in accrued liabilities 17600
Increase in income tax payable 4200
Net cash flow from opreating activities (a) 129200
Cash Flow from Financing activities
Cash dividend paid -4100
Bonds paid -63600
Common stock issued 41600
Net cash Flow from Financing activities (b) -26100
Cash Flow from Investing activities
Purchase of long term investments -10300
Purchase of property, plant & equipment -74200
Net cash Flow from Investing activities (c) -84500
Net Channge in cash c=a+b+c 18600

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