Question

Part 1. Operating Activities Part 2. Investing Activities Part 3. Financing Activities Part 4. Net Cash Flows and Check.

Part 1: Prepare the Operating Activities Section of the Statement of Cash Flows for Duke Company using the INDIRECT METHOD.

You will use the following information for each part:

Condensed financial data of Duke Company appear below:

Duke COMPANY

Comparative Balance Sheet

December 31

                                                                                                                  2017                   2016   

Assets

Cash                                                                                                         $ 41,000             $ 35,000

Accounts receivable                                                                                      75,000                53,000

Inventories                                                                                                  120,000              132,000

Prepaid expenses                                                                                           19,000                25,000

Investments                                                                                                100,000                75,000

Plant assets                                                                                                 325,000              250,000

Accumulated depreciation                                                                         (65,000)            (60,000)

         Total                                                                                                $615,000             $510,000

Liabilities and Stockholders' Equity

Accounts payable                                                                                      $ 93,000             $ 75,000

Accrued expenses payable                                                                             29,000                24,000

Bonds payable                                                                                            120,000              160,000

Common stock                                                                                            275,000              170,000

Retained earnings                                                                                        98,000                 81,000

         Total                                                                                                $615,000             $510,000

Duke COMPANY

Income Statement

For the Year Ended December 31, 2017

Sales                                                                                                        $450,000

Less:

         Cost of goods sold                                                                           $300,000

         Operating expenses (excluding depreciation)                                         60,000

         Depreciation expense                                                                           17,000

         Income taxes                                                                                       20,000

         Interest expense                                                                                   18,000

         Loss on sale of plant assets                                                                      3,000             418,000

Net income   $ 32,000

Answer 1

Cash flow from Operating activities	Amount(in $)
Net Income	32,000
Add:Depreciation expenses	17,000
Add:Loss on sale of Plant assets	3,000
Cash flow before adjustment of working capital items	52,000
Less:Increase in Accounts Receivable	(22,000)
Add:Decrease in Inventory	12,000
Less:Increase in Prepaid expenses	(6,000)
Add:Increase in accounts payable	18,000
Add:Increase in Accrued expense payable	5,000
Net Cash flow from Operating activities(A)	59,000
Cash flow from Investing activities
Purchase of Plant Assets
Sale of Plant Assets
Investment made	(25,000)
Cash flow from Investing activities(B)	(25,000)
Cash flow from Financing activities
Reedeming of Bonds	(40,000)
Issue of common stock	$1,05,000
Cash flow from Financing activities(C)	$65,000
Net Change in cash(A+B+C)	$99,000
Cash at Beginning of year	$35,000
Cash at end of year	$41,000
Note:There is no data relating to the Plant Asset sold like cost of the asset or the selling price, without which it is not possible to determine the
Sales proceeds of Plant assets which will be shown as a cash inflow and Purchase of Plant Assets which will be shown as a cash outflow