Question

The following information is available for Chenard Corporation for the year ended December 31, 2017.

Beginning cash balance $35,000

Accounts payable decrease 3,200

Depreciation expense 76,000

Accounts receivable increase 8,200

Inventory increase 13,000

Net income 269,100

Cash received for sale of land at book value 35,000

Sales revenue 747,000

Cash dividends paid 12,000

Income tax payable increase 4,700

Cash used to purchase building 144,000

Cash used to purchase treasury stock 32,000

Cash received from issuing bonds 206,000

Prepare a statement of cash flows using the indirect method.

Answer 1

Solution

Chenard Corporation
Statement of Cash Flows
For the Year ended June 30th 2017
A. Cash Flows from Operating Activity
Net Income		$   2,69,100.00
Adjustments to reconcile net income to net cash flows from Operating Activities
Income statement items not affecting cash
Depreciation expense	$           76,000.00
Changes In Current Operating Assets Liabilities
Increase in Accounts Receivable	$           (8,200.00)
Increase in Inventory	$        (13,000.00)
Decrease in Accounts Payable	$           (3,200.00)
Increase in Income taxes payable	$             4,700.00
		$      56,300.00
Net cash flow from Operating activities		$   3,25,400.00
B. Cash flows from Investing Activities
Cash received for sale of land	$           35,000.00
Cash used to purchase building	$     (1,44,000.00)
Net Cash Used in Investing activities		$(1,09,000.00)
C. Cash Flows from Financing activities
Cash used to purchase treasury stock	$        (32,000.00)
Cash received from issuing bonds	$       2,06,000.00
Cash paid for Dividends	$        (12,000.00)
Cash flows from Financing activities		$   1,62,000.00
Net Increase (Decrease) in Cash [A+B+C]		$   3,78,400.00
Cash balance at prior Year-end		$      35,000.00
Cash balance at Current Year-end		$   4,13,400.00