In: Accounting
Terry company's 2017 income statement and comparative balance sheets at December 31 of 2016 and 2017are shown.
Terry Company
Income Statement
For the year Ended December 31, 2017
Sales $ 390,000
Cost of Goods Sold 235,000
_______
Gross Profit $ 155,000
Wages Expenses $ 63,000
Depreciation Expense 14,000
Other Operating Expenses 26,000
Income Tax Expense 17,000 120,000
______ ________
Net Income $ 35,000
Terry Company
Balance Sheets
Dec. 31, Dec. 31,
Assets 2016 2017
Cash $ 16,000 $ 30,000
Accounts Receivable (net) 28,000 35,000
Inventory 110,000 84,000
Prepaid Expense 12,000 8,000
Plant Assets 178,000 130,000
Accumulated Depreciation (76,000) (62,000)
Total Assets $ 268,000 $ 225,000
Liabilities and Stockholders' Equity
Accounts Payable $ 27,000 $ 14,000
Wages Payable 6,000 2,500
Income Tax Payable 3,000 4,500
Common Stock 135,000 125,000
Retained Earnings 97,000 79,000
________ _________
Total Liabilities and $ 268,000 $ 225,000
Stockholders' Equity
Cash dividends of $17,000 were declared and paid during 2016 Plant assets of $48,000 were purchased for cash, and later in the year, an additional $10,000 common stock was issued for cash
REQUIRED
Prepare only the Cash Flows from Operations section of the Cash Flow Statement using the
indirect method.
Reminder: you need only prepare the Cash Flow from Operations section of the statement
Statement of Cash Flow | ||
Particulars | Amount | Total Amount |
Cash flow from operating activities | ||
Net Income | 35,000.00 | |
Add Tax provision | 17,000.00 | |
Depreciation | 14,000.00 | |
Increase in AR | (7,000.00) | |
Decrease in inventory | 26,000.00 | |
Decrease in prepaid expense | 4,000.00 | |
Decrease in AP | (13,000.00) | |
Decrease in wages payable | (3,500.00) | |
Taxes paid = 17000+3000 - 4500 | (15,500.00) | |
Cash flow from operating activities | 57,000.00 | |
Cash flow from Investing activities | ||
Sale of plant assets = 48,000- 28,000 Acc Dep | 20,000.00 | |
Cash flow from Investing activities | 20,000.00 | |
Cash flow from Financing activities | ||
Issue of stock | 10,000.00 | |
Redemption of Stock | (20,000.00) | |
Dividends Paid = 35,000 - (79000 - 97000) | (53,000.00) | |
Cash flow from Financing activities | (63,000.00) | |
net change in cash and cash equivalents | 14,000.00 | |
Opening cash and cash equivalents | 16,000.00 | |
Closing cash and cash equivalents | 30,000.00 |