Question

2. The Fancy Company's comparative balance sheets for 2016 and 2017, and additional information, are presented below.

                                                            Fancy Company

                                                Comparative Balance Sheets

                                                                   December 31,            December 31,

                                                                           2017                           2016

ASSETS

Cash                                                                $ 14,000                      $ 9,000

Accounts receivable                                          52,000                      24,000

Inventory                                                           87,000                      40,000

Equipment                                                      125,000                     100,000

Accumulated depreciation                              (42,000)                    (34,000)

Prepaid expenses                                                4,000                          2,000

Land                                                                     -0-                            7,000

Building                                                          50,000                             -0-

Total Assets                                                 $290,000                   $148,000

LIABILITIES AND SHAREHOLDERS' EQUITY

Accounts payable                                          $ 25,000                    $ 14,000

Interest payable                                                   8,000                         6,000

Taxes payable                                                               37,000                       11,000

Short-term note payable                                   37,000                       32,000

Bonds payable                                                  75,000                       50,000

Common stock, $10 par                                    75,000                       25,000

Retained earnings                                             33,000                       10,000

Total Liabilities and Shareholders’ Equity    $290,000                  $148,000

Additional 2017 information:

Net income, $31,000

Sold land for gain of $3,000

Paid dividends of $8,000

Issued $50,000 common stock to purchase building

Required:

Prepare Fancy Company's 2017 statement of cash flows (using the indirect method for operating activities) .

Answer 1

Answer-

FANCY COMPANY
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED 31 DECEMBER,2017
Particulars		Amount
		$
Cash flow from operating activities
Net Income		31000
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation		8000
Gain on sale land		-3000
Change in operating assets & liabilities
Increase in accounts receivable		-28000
Increase in inventory		-47000
Increase in accounts payable		11000
Increase in interest payable		2000
Increase in taxes payable		26000
Increase in prepaid expenses		-2000
Net cash flow from operating activities (a)		-2000
Cash Flow from Investing activities
Land sold	($7000+$3000)	10000
New equipment purchased		-25000
Net cash Flow from Investing activities (b)		-15000
Cash Flow from Financing activities
Cash dividends paid		-8000
Bonds issued		25000
Short term notes issued		5000
Net cash Flow from Financing activities (c)		22000
Net Change in cash c=a+b+c		5000
Beginning cash balance		9000
Closing cash balance		14000
Schedule of non cash investing & financing activities
Issuance of common stock for purchase of land		$50000