Question

Paddleboard Inc. began operations on January 1, 2016. Its post-closing trial balance at December 31, 2016 and 2017, is shown below along with some other information.

Paddleboard Inc.
Income Statement
For Year Ended December 31, 2017
(000s)
Revenues:
Sales		$3,814
Cost of goods sold		1,566
Gross Profit		2,248
Expenses:
Other expenses	$850
Depreciation expense	110
Total operating expenses		960
Profit from operations		1,288
Income tax expense		288
Profit		$1,000

Paddleboard Inc.
Post-Closing Trial Balance
(000s)
	December 31
Account	2017	2016
Cash	$3,180	$1,870
Receivables	2,820	2,110
Merchandise inventory	2,590	3,160
Property, plant and equipment	3,070	2,750
Accumulated depreciation	1,950	1,840
Investments	2,110	2,270
Accounts payable	1,950	1,470
Accrued liabilities	320	480
Bonds payable	2,530	2,700
Common shares	3,070	2,600
Retained earnings	3,950	3,070

Other information:
a. All accounts payable balances result from merchandise purchases.
b. All sales are credit sales.
c. All credits to accounts receivable are receipts from customers.
d. All debits to accounts payable result from payments for merchandise.
e. All other expenses are cash expenses.

Required:
Prepare a statement of cash flows for 2017 using the direct method to report cash inflows and outflows from operating activities. (List any deduction in cash and cash outflows as negative amounts. Enter amounts in thousands, not in dollar.)

Answer 1

Cash received from Customers = Sales - Increase in Accounts Receivable

Cash payments for merchandise = Cost of goods sold - Increase in Accounts payable - Decrease in Inventories

Cash payments for Operating expenses = Other expense + Decrease in Accrued liabilities

Cash Dividends = Beg Bal in Retained Earnings + Net Income - Ending bal in Retained Earnings