Question

Use the following calendar-year information to prepare Ibrahim Company's statement of cash flows using the direct method: (4 Points)

Cash paid to purchase machinery	$ 124,000
Cash paid for merchandise inventory	220,000
Cash paid for operating expenses	280,000
Cash paid for interest	4,000
Cash received for interest	10,000
Cash proceeds from sale of land	100,000
Cash balance at beginning of year	15,000
Cash balance at end of year	77,000
Cash borrowed on a short-term note	25,000
Cash dividends paid	24,000
Cash received from stock issuance	57,000
Cash collections from customers	522,000

Answer 1

Ibrahim Company

Statement of Cash Flows (Direct Method)

For the year ended December 31

Cash flows from operating activities:
Cash received from customers	$522,000
Cash received for interest	$10,000
Cash paid for merchandise inventory	($220,000)
Cash paid for operating expenses	($280,000)
Cash paid for interest	($4,000)
Net cash provided by operating activities		$28,000
Cash flows from investing activities:
Cash received from sale of land	$100,000
Cash paid to acquire machinery	($124,000)
Net cash used by investing activities		($24,000)
Cash flows from financing activities:
Cash received on a short-term loan	$25,000
Cash received from stock issuance	$57,000
Cash dividends paid	($24,000)
Net cash provided by financing activities		$58,000
Net increase in cash		$62,000
Cash balance at beginning of year		$15,000
Cash balance at end of year		$77,000