Question

INCOME STATEMENT
NET INCOME		$       7,945
DEPRECIATION EXPENSE		$       2,325
LOSS ON SALE OF PLANT ASSETS		$         375
ADDITIONAL INFO
NEW PLANT ASSETS PURCHASED		$       4,250
OLD PLANT ASSETS SOLD FOR CASH		$           75
ORIGINAL COST		$       2,875
BONDS MATURED AND PAID OFF IN CASH
CASH DIVIDEND PAID		$2,018
INSTRUCTIONS
PREPARE THE WORKSHEET FOR THE STATEMENT OF CASH FLOW.
PREPARE THE ACTUAL STATEMENT OF CASH FLOWS.
NOTE: If it is easier for you to just do the actual statement of cash flow without
using the worksheet, that's ok. Most students (about 95%) find it easier to
to do the worksheet first and then the actual statement of cash flows.

Answer 1

Partial Statement of Cash Flow
Cash Flow from Operating Activities
Net Income	7,945
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation	2,325
Loss on sale of Plant Assets	375
Changes in current operating assets and liabilities:	-
Net cash flow from operating activities		10,645
Cash flows from (used for) investing activities:
Cash from sale of Old Plant	75
Cash used for purchase of New Plant Asset	(4,250)
Net cash flow used for investing activities		(4,175)
Cash flows from (used for) financing activities:
Cash paid for Bonds Matured	-
Cash used for dividends	(2,018)
Net cash used for financing activities		(2,018)
Increase in cash		4,452
Cash at the beginning of the year
Cash at the end of the year		4,452
Original Cost	2875
Less: Accumulated Depreciation	-2425
Net Book Value	450
Cash Proceeds	75
Loss on sale of Plant	375

The details for cash payment for sale of bond is not mentioned in question, aslo opening and ending cash cannot be find.

There is no balance sheet to track the working capital movement as well.

Note: The accumulated depreciation is debited, cash is debited and loss is debited, original cost of assets is credited when the asset is sold for loss.

However if the depreciation of 2325 includes the 2425 depreciation for sale of equipment then the cash flow would be as below.

Partial Statement of Cash Flow
Cash Flow from Operating Activities
Net Income	7,945
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation	(100)
Loss on sale of Plant Assets	375
Changes in current operating assets and liabilities:	-
Net cash flow from operating activities		8,220
Cash flows from (used for) investing activities:
Cash from sale of Old Plant	75
Cash used for purchase of New Plant Asset	(4,250)
Net cash flow used for investing activities		(4,175)
Cash flows from (used for) financing activities:
Cash paid for Bonds Matured	-
Cash used for dividends	(2,018)
Net cash used for financing activities		(2,018)
Increase/ (Decrease) in cash		2,027
Cash at the beginning of the year
Cash at the end of the year		2,027