Question

	Dec. 31, Year 2	Dec. 31, Year 1
ASSETS
Current assets:
Cash and cash equivalents	$ 92,069	$ 72,634
Accounts receivables, net	55,947	75,492
Inventories	50,784	53,129
Prepaid expenses	12,112	13,057
Total current assets	210,912	214,312
Equipment	145,444	134,312
Less: Accumulated depreciation	(50,515)	(36,689)
Total assets	$305,841	$311,935
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$ 25,466	$ 34,879
Accrued liabilities	40,574	40,722
Total current liabilities	66,040	75,601
Long-term debt	10,422	10,206
Stockholders’ equity:
Contributed capital	1,662	1,284
Retained earnings	227,717	224,844
Total stockholders’ equity	229,379	226,128
Total liabilities and stockholders’ equity	$305,841	$311,935

Consolidated Statement of Income

(in thousands)

	Year 2
Net sales	$130,896
Cost of sales	74,040
Gross profit	56,856
Operating expenses:
Selling, general & administrative expenses	33,211
Depreciation expense	13,826
Total operating expenses	47,037
Operating income	9,819
Interest income	239
Income before income taxes	10,058
Income tax expense	3,621
Net income	$   6,437

The Group, Inc. did not sell any equipment or repay any borrowings during the year ended December 31, Year 2. The company declared and paid dividends in the amount of $3,564 during the year ended December 31, Year 2.

Questions

1. Using the information provided above, compute the net cash flow provided by (used in) operating, investing and financing activities using the indirect method.

2. Prepare a cash flow statement for the year ended December 31, Year 2.

Answer 1

STATEMENT OF CASH FLOWS [INDIRECT METHOD]
Cash flows from operating activities:
Net income		$               6,437
Adjustments to reconcile net income to net cash provided by operations:
Depreciation	$ 13,826
Decrease in receivables [75492-55947]	$ 19,545
Decrease in inventories [53129-50784]	$                   2,345
Decrease in prepaid expenses [13057-12112]	$ 945
Decrease in accrued liabilities [40722-40574]	$ -148
Decrease in accounts payable [34879-25466]	$ -9,413	$             27,100
Net cash from operating activities		$             33,537
Cash flows from investing activities:
Purchase of equipment [145444-134312]	$               -11,132
Net cash from investing activities		$ -11,132
Cash flows from financing activities:
Issuance of common stock [1662-1284]	$ 378
Issue of additional debt [10422-10206]	$ 216
Payment of dividends	$                 -3,564
Net cash used by financing activitites		$              -2,970
Net increase in cash		$             19,435
Cash & cash equivalents in the beginning		$             72,634
Cash & cash equivalents in the end		$             92,069