Question

Statement of Cash Flows—Direct Method

The comparative balance sheet of Canace Products Inc. for December 31, 20Y6 and 20Y5, is as follows:

Dec. 31, 20Y6 Dec. 31, 20Y5
Assets
Cash $288,060 $266,410
Accounts receivable (net) 104,350 95,680
Inventories 294,580 283,300
Investments 0 109,760
Land 151,090 0
Equipment 325,010 250,470
Accumulated depreciation (76,090) (67,540)
Total assets $1,087,000 $938,080

Liabilities and Stockholders' Equity
Accounts payable (merchandise creditors) $196,750 $184,800
Accrued expenses payable (operating expenses) 19,570 24,390
Dividends payable 10,870 8,440
Common stock, $10 par 58,700 45,970
Paid-in capital: Excess of issue price over par-common stock 220,660 127,580
Retained earnings 580,450 546,900
Total liabilities and stockholders’ equity $1,087,000 $938,080

The income statement for the year ended December 31, 20Y6, is as follows:

Sales $1,718,710
Cost of goods sold 707,700
Gross profit $1,011,010
Operating expenses:
Depreciation expense $8,550
Other operating expenses 892,450
Total operating expenses 901,000
Operating income $110,010
Other expense:
Loss on sale of investments (29,640)
Income before income tax $80,370
Income tax expense 25,720
Net income 54,650

Additional data obtained from an examination of the accounts in the ledger for 20Y6 are as follows:

Equipment and land were acquired for cash.
There were no disposals of equipment during the year.
The investments were sold for $80,120 cash.
The common stock was issued for cash.
There was a $21,100 debit to Retained Earnings for cash dividends declared.

Required:

Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.

Canace Products Inc.
Statement of Cash Flows
For the Year Ended December 31, 20Y6
Cash flows from operating activities:
Cash received from customers $



Net cash flow from operating activities $
Cash flows from investing activities:
$


Net cash flow used for investing activities
Cash flows from financing activities:
$

Net cash flow from financing activities
$
Cash at the beginning of the year
Cash at the end of the year $

Answer 1

Ans- Canace Products inc.

Statement of Cash Flows

For the Year Ended December 31,2016

Cash flows from opearting activities (Direct Method)
	Calculations	Amount ($)
Cash receipts from customers	($ 95,680+$1,718,710-$104,350)	1,710,040
Cash paid to suppliers	($184,800+718,980-196,750)	-707,030
Operating Expenses paid	($24,390+892,450-19,570)	-897,270
Cash Generated from Operations		105,740
Income Tax paid		-25,720
Net cash from operating activities			$80,020
Cash flows from Investing Activities:
Purcahse of Land		-151,090
Purchase of Equipment	($250,470-$325,010)	-74,540
Sale on Investments		80,120
Net cash used in investing activities			-$145,510
Cash flows from financing activities:-
Proceeds from issue of common stock	($58,700-$45,970)	$12,730
Excess of issue price over par	($220,660-$127,580)	93,080
Dividends paid	($8,440+$21,100-$10,870)	-18,670
Net cash from financing activities			$87,140
Net decrease in Cash and Cash equivalents			-$21,650
Cash and Cash equivalents at the beginning of the period			$266,410
Cash and Cash equivalents at the end of the period			$288,060

Working Note for Purchases:-

Purchases:
Closing Inventory	294,580
Add: Cost of goods sold	707,700
Less: Opening Inventory	283,300
Purchases	718,980

Kindly give thumbsup if u like my answer please....Thanks!!!