Question

Example Company Balance Sheet December 31, 2019 and 2020				Example Company Income Statment For Year Ended December 31, 2020
	2019	2020				2020
Assets				Sales		873,252
Current Assets				Cost of Goods Sold		192,075
Cash	976	233		Gross Margin		681,177
Accounts Recievable	890	278
Allowance for Doubtful Accounts	(155)	(40)		EXPENSES
Investment in Bonds	1	171		Bad Debt		328
Inventories	285	540		Depreciation		66,337
Prepaid expenses	153	32		Other		608,253
Interest Receivable	930	216		TOTAL EXPENSES		674,918
Total Current Assets	3,080	1,430		Operating Income		6,259
				Interest INcome		36
Property, Plant, and Equiptment	48,598	311,456		Interest Expense		(732)
Less Accumulated Depreciation	21,282	37,664		Capital gain (Loss) on disposal of PP&E		643
Property, Plant, and Equiptment, net	27,316	273,792		Net income before taxes		6,206
TOTAL ASSETS	30,396	275,222		Income Tax Expense		1,405
LIABILITIES				Net INcome		4,801
Current Liabilities
Notes PAyable	9,868	8,409
Accounts Payable	321	828
Accured Liabilities	19	406
Accured Interest	213	732
Income Taxes Payble	12	755
Current Portion of Long Term Debt	171	397
Total Current Liabilites	10,604	11,527
Long Term Liabilities
Long term debt, net of current protion	2,052	250,525
TOTAL LIABILITIES	12,656	262,052
STOCKHOLDERS EQUITY
Common Stock	78	163
Additional Paid in Captial	339	709
Retained Earnings	17,323	12,298
Total Stockholders Equity	17,740	13,170
Total Liabilities and Stockholders Equity	30,396	275,222

Proceeds from the sale of capital assets for 2020 are $16,000

A. Prepare the Cash Flow Statement

B. Prepare the Reconciliation of net income to net cash flow from operations balances to net cash flow from operations in the basic statement

C. calculate the purchases of fixed assets

Answer 1

	For the year ended 31 March 2020
Cash flows from operating activities
Net Income before tax	(3,833)
Bad Debts	328
Interest income	(36)
Interest expenses	732
Depreciation	66,337
Capital Gain on disposal of PPE	(643)
	62,885
Changes in assets and liabilities:
(Increase)/ decrease in Accounts Receivable (Refer note 1)	169
(Increase)/ decrease in Inventories	(255)
(Increase)/ decrease in Prepaid expenses	121
Increase/ (decrease) in notes payable	(1,459)
Increase/ (decrease) in accounts payable	507
Increase/ (decrease) in accrued liabilities	387
Cash generated/ (used) from operating activities	62,355
Income tax paid (net)	(662)
Net cash from/ (used) in operating activities (A)	61,693
Cash flows from investing activities
Purchase of property, plant and equipment	(328,170)
Proceed from the sale of capital assets	16,000
Investments in Bonds	(170)
Interest received (Refer note 2)	750
Net cash used in investing activities (B)	(311,590)
Cash flows from financing activities
Proceeds from issue of equity share capital	455
Proceeds from borrowings	248,699
Interest Paid	(213)
Net cash flow from financing activities (C)	249,154
Net increase/ (decrease) in cash and cash equivalents (A+B+C)	(743)
Cash and cash equivalents at the beginning of the year	976
Cash and cash equivalents at the end of the year	233
Notes to Statement of cash flows:
i. Cash and cash equivalents	As at 31 March 2020
Components of cash and cash equivalents:-
Cash on hand	233
Balances with banks on current accounts	-
Total cash and cash equivalents	233
Notes :-
Note 1:- Accounts Receivable
Change in balance	497
Less: Bad debts	328
	169
Note 2:- Interest Received
Opening Balance of Interest Receivable	930
Add :- Interest Income	36
Closing Balance of Interest Receivable	216
	750
Note 3:- Purchase of Property, Plant & Equipment
Closing Balance	(273,792)
Opening Balance	27,316
Depreciation	(66,337)
Cost of Sale of Assets	(15,357)
	(328,170)
Note 4:- Interest Paid
Opening balance of Accrued Interest	213
Closing balance of Accrued Interest	(732)
Interest Expense	732
	(213)
Note 5:- Income Tax Paid
Income Tax Payable- Opening	12
Income Tax Payable- Closing	(755)
Income Tax Expenses	1,405
	(662)
Note 6:- Proceeds from borrowing
Long term borrowings- Opening	(2,052)
Long term borrowings- Closing	250,525
Current Portion of long term borrowings- Opening	(171)
Current Portion of long term borrowings- Closing	397
	248,699