Question

LAG network inc. balance sheet and income statement are as follows:
LAG network inc.
income statement
for year ended dec. 31 2020
sales       $928600
cost of goods sold    $556200
gross profit       324400
operating expenses
depreciation expenses 25200
other expenses 231800
total operating expenses      257000
profit from operations    115400
income taxes                      18600
profit                                 $ 96800
       LAG network inc.
    comperative balance sheet informed dec 31
                                    2020                  2019
assets
cash                          81190                  54400
acc. receviable         42400                   37600
merchandise inventory 285710          247800
equipment                 154400                 138400
acc. depreciation        71800                    46600
total assets                   491900               431600
liability and equity
acc. payable              31200                   43800
income tax pay.         11600                  10200
common shares        363600                337500
retained earnings       86100                  40100
total liability and equity 491900           431600
additional information regarding LAG network inc 's activities during 2020
a)     equipment is purchased for $ 16000 cash
b)       10200 common share are issued for cash ag $2.50 per share
c)      declared and paid $50800 of cash dividends during the year
required prepare a statement of cash flows for 2020 that reports the cash inflows and outflows from operating activities acc. to the ibdirect mehod. ( list any deduction in cash outflows aa negative amounts)
       

Answer 1

Cash Flow Statement (Indirect Method)
Particulars	Amount	Amount
Net Income		$      96,800.00
Adjustments to reconcile net income to:
Net cash provided by operating activities
Depreciation	$      25,200.00
Increase in Accounts Receivable	$       (4,800.00)
Increase in Inventory	$    (37,910.00)
Decrease in Accounts Payable	$    (12,600.00)
Increase in Taxes Payable	$        1,400.00
Net Cash Generated		$    (28,710.00)
Net cash provided by operating activities	(A)	$      68,090.00
Cash Flows from Investing Activities
Purchase of Equipment	$    (16,000.00)
Net cash provided by investing activities	(B)	$    (16,000.00)
Cash Flows from Financing Activities
Dividend Paid	$    (50,800.00)
Increase in Common Stock	$      25,500.00
Net cash provided by Financing activities	(C')	$    (25,300.00)
Net increase/decrease in cash	(A+B+C')	$      26,790.00
Add:Opening cash balance		$      54,400.00
Closing cash balance		$      81,190.00