December 31 2012 2011 Assets Cash 645500 308500 A/R, net 817000 763500 Investments (HFT) 396500 0...

December 31	2012	2011
Assets
Cash	645500	308500
A/R, net	817000	763500
Investments (HFT)	396500	0
Inventory	893000	1231000
Investments (HTM)	163500	164500
Property, Plant, Equipment	466000	1011500
Accumulated Depreciation	259500	246500
Patent, net	275500	502500
Total Assets	3397500	3735000
Liabilities and Shareholders' Equity
A/P	415000	682000
Income tax payable	228500	150500
Bonds Payable	1300500	1758500
Common Shares	780500	407500
Retained Earnings	673000	736500
Total Liabilities and Shareholders' Equity	3397500	3735000

Details regarding 2012 activities are:

-HFT/Held for trading Investments consist of treasury bills maturing on February 15, 2013

-Changes in other balance sheet accounts resulted from usual transactions and events

-Machinery costing $695,500 and having a carrying amount of $495,500 was sold for $465,500

-Bonds Payable were all issued at face value

-Cash dividends of $733,500 were declared and paid in 2012

-An HTM/Held till maturity Investment was sold at par for $1000. There were no other transactions affecting HTM Investments in the year.

Using the indirect method, please prepare a statement of cash flows for the year 2012. It must include

Net cash from operating activities, Net cash from investing activities, and Net cash from financing activities.

Expert Solution

Cash flow from Operating activities
Net Income [673,000 - (736,500 - 733,500)]		670,000
Adjustments to reconcile Net Income:
Add: Amortization of patenets	227,000
Add: Depreciation [259,500 - (246,500 - 200,000*)]	213,000
Add: Loss on sale of machinery [495,500 - 465,500]	30,000
Less: Increase in accounts receivable	(53,500)
Add: Decrease in inventory	338,000
Less: Decrease in accounts payable	(267,000)
Add: Increase in tax payable	78,000	565,500
Net cash from Operating activities		1,235,500

Cash flow from Investing activities
Sale of machinery	465,500
Sale of HTM investments	1,000
Purchase of machinery [466,000 - (1,011,500 - 695,500)]	(150,000)	316,500

Cash flow from Financing activities
Dividend paid	(733,500)
Bonds	(458,000)
Issuance of common stock	373,000	(818,500)

Net Increase in cash and cash equivalents		733,500
Add: Opening cash and cash equivalents		308,500
Closing cash and cash equivalents [645,500 + 396,500]**		1,042,000

*Accumulated depreciation on machinery sold = 695,500 - 495,500 = 200,000

**Treasury bills will also form part of Cash and Cash equivalents

ekkarill92 answered 2 years ago

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