Question

Exercise 23-11

Condensed financial data of Bridgeport Company for 2017 and 2016 are presented below.

BRIDGEPORT COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2017 AND 2016
		2017			2016
Cash		$1,840			$1,170
Receivables		1,730			1,310
Inventory		1,580			1,880
Plant assets		1,910			1,700
Accumulated depreciation		(1,210	)		(1,170	)
Long-term investments (held-to-maturity)		1,310			1,420
		$7,160			$6,310
Accounts payable		$1,190			$900
Accrued liabilities		210			260
Bonds payable		1,400			1,580
Common stock		1,880			1,720
Retained earnings		2,480			1,850
		$7,160			$6,310

BRIDGEPORT COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017
Sales revenue		$7,000
Cost of goods sold		4,710
Gross margin		2,290
Selling and administrative expenses		940
Income from operations		1,350
Other revenues and gains
Gain on sale of investments		80
Income before tax		1,430
Income tax expense		540
Net income		890
Cash dividends		260
Income retained in business		$630

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).)

Answer 1

Statement of Cash Flow
Particulars	Amount	Total Amount
Cash flow from operating activities
Income	890.00
Depreciation	40.00
Increase in AR	(420.00)
Decrease in inventory	300.00
Increase in AP	290.00
Decrease in Accrued liabilities	(50.00)
Cash flow from operating activities		1,050.00
Cash flow from Investing activities
Sale of invt	110.00
Purchase of Plant assets	(140.00)
Cash flow from Investing activities		(30.00)
Cash flow from Financing activities
Issue of Stock	90.00
Redemption of bonds	(180.00)
Dividends Paid	(260.00)
Cash flow from Financing activities		(350.00)
net change in cash and cash equivalents		670.00
Opening cash and cash equivalents		1,170.00
Closing cash and cash equivalents		1,840.00