Question

Condensed financial data of Oriole Company for 2017 and 2016 are presented below. ORIOLE COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2017 AND 2016 2017 2016 Cash $1,830 $1,180 Receivables 1,710 1,320 Inventory 1,590 1,920 Plant assets 1,890 1,710 Accumulated depreciation (1,220 ) (1,190 ) Long-term investments (held-to-maturity) 1,320 1,440 $7,120 $6,380 Accounts payable $1,190 $890 Accrued liabilities 210 260 Bonds payable 1,400 1,580 Common stock 1,940 1,660 Retained earnings 2,380 1,990 $7,120 $6,380 ORIOLE COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017 Sales revenue $6,720 Cost of goods sold 4,680 Gross margin 2,040 Selling and administrative expenses 920 Income from operations 1,120 Other revenues and gains Gain on sale of investments 80 Income before tax 1,200 Income tax expense 550 Net income 650 Cash dividends 260 Income retained in business $390 Additional information: During the year, $70 of common stock was issued in exchange for plant assets. No plant assets were sold in 2017.

Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) ORIOLE COMPANY Statement of Cash Flows (Indirect Method) $ Adjustments to reconcile net income to $ $ $

Answer 1

Cash Flow Statement-Indirect Direct Method:-

Cash Flow from Operating Activities:-	.	.
Net income		$650
Adjustment to reconcile net income to net cash flow provided by:
Add: depreciation expenses (1220 - 1190)	$30
Less: gain on sale of investment	($80)
Changes in working capital
Less: increase in accounts receivable(1710 - 1320 )	(390)
Add: decrease in inventory (1590 - 1920)	330
Add: increase in accounts payable (1190 - 890 )	300
Less: decrease in accrued liabilities (210 - 260)	(50)
.		140
Net Cash Flow from Operating Activities		$790
.
Cash Flow from Investing Activities:-
Purchase of Plant Assets{1890-1710 = 180 ) ($180 - $70 {common stock issue for plant})	($110)
Sale of Held-to-Maturity Investments (1320 - 1440 = 120) ($120(Decrease Long Term Investment} + $80{Gain on sale })	$200
Net Cash Provided by Investing Activities		$90
Cash Flow from Financing Activities:-
Repaid Bond Payable (1400 - 1580 )	($180)
Issuance of Capital Stock (1940 - 1660 + 280) ($280 {Increase common stock} - $70{common stock issue for plant})	$210
Cash Dividend Payment	($260)
Net Cash Used by Financing Activities		($230)
Net Increase in Cash (510 + 90 + (230))		$650
Cash at Beginning of Period		$1180
Cash at End of Period		$1830
Non cash Investing and Financing Activities
Issuance of Common Stock for Plant Assets		$70