In: Accounting
Presented below are the 2018 income statement and comparative
balance sheets for Santana Industries.
SANTANA INDUSTRIES Income Statement For the Year Ended December 31, 2018 ($ in thousands) |
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Sales revenue | $ | 14,450 | |||
Service revenue | 3,600 | ||||
Total revenue | $ | 18,050 | |||
Operating expenses: | |||||
Cost of goods sold | 7,300 | ||||
Selling | 2,500 | ||||
General and administrative | 1,600 | ||||
Total operating expenses | 11,400 | ||||
Operating income | 6,650 | ||||
Interest expense | 210 | ||||
Income before income taxes | 6,440 | ||||
Income tax expense | 2,600 | ||||
Net income | $ | 3,840 | |||
Balance Sheet Information ($ in thousands) |
Dec. 31, 2018 |
Dec. 31, 2017 |
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Assets: | |||||||
Cash | $ | 7,450 | $ | 2,290 | |||
Accounts receivable | 2,700 | 2,300 | |||||
Inventory | 4,200 | 3,100 | |||||
Prepaid rent | 160 | 320 | |||||
Plant and equipment | 14,700 | 12,200 | |||||
Less: Accumulated depreciation | (5,200 | ) | (4,600 | ) | |||
Total assets | $ | 24,010 | $ | 15,610 | |||
Liabilities and Shareholders’ Equity: | |||||||
Accounts payable | $ | 1,600 | $ | 1,200 | |||
Interest payable | 110 | 0 | |||||
Deferred service revenue | 820 | 610 | |||||
Income taxes payable | 560 | 820 | |||||
Loan payable (due 12/31/2020) | 5,200 | 0 | |||||
Common stock | 10,100 | 10,100 | |||||
Retained earnings | 5,620 | 2,880 | |||||
Total liabilities and shareholders' equity | $ | 24,010 | $ | 15,610 | |||
Additional information for the 2018 fiscal year ($ in
thousands):
Cash dividends of $1,100 were declared and paid.
Equipment costing $4,200 was purchased with cash.
Equipment with a book value of $600 (cost of $1,700 less accumulated depreciation of $1,100) was sold for $600.
Depreciation of $1,700 is included in operating expenses.
Required:
Prepare Santana Industries' 2018 statement of cash flows, using the
indirect method to present cash flows from operating activities.
(Amounts to be deducted should be indicated with a minus
sign. Enter your answers in thousands.)
Santana Industries
Statement of Cash Flows for year ended Dec 31, 2018 (Amounts in $)
Cash Flows from Operating Activities | ||
Net Income | 3,840 | |
Adjustments to reconcile net income to operating cash flows | ||
Add: Depreciation Expense | 1,700 | |
Less: Increase in Accounts Receivable ($2,700-$2,300) | (400) | |
Less: Increase in Inventory ($4,200-$3,100) | (1,100) | |
Add: Decrease in Prepaid rent ($320-$160) | 160 | |
Add: Increase in Accounts Payable ($1,600-$1,200) | 400 | |
Add: Increase in Interest Payable ($110-$0) | 110 | |
Add: Increase in Deferred Service Revenue ($820-$610) | 210 | |
Less: Decrease in Income taxes payable ($820-$560) | (260) | |
Total Adjustments | 820 | |
Net cash provided by Operating Activities (A) | 4,660 | |
Cash Flows from Investing Activities | ||
Purchase of Equipment | (4,200) | |
Sale of Equipment | 600 | |
Net Cash used in Investing Activities (B) | (3,600) | |
Cash Flows from Financing Activities | ||
Dividends paid in cash | (1,100) | |
Borrowing of long term loan | 5,200 | |
Net cash provided by Financing Activities (C) | 4,100 | |
Net Increase or (Decrease) in Cash (A+B+C) | 5,160 | |
Add: Beginning Cash Balance | 2,290 | |
Ending Cash Balance | 7,450 |