In: Accounting
The following info is available for Johnson Company 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 dividend 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
Solution
Johnson Company | ||
Statement of Cash Flows | ||
For the Year Ended December 31, 2017 | ||
Cash flows from operating activities: | ||
Net income | $ 269,100.00 | |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation expense | $ 76,000.00 | |
Accounts payable decrease | $ (3,200.00) | |
Accounts receivable increase | $ (8,200.00) | |
Inventory increase | $ (13,000.00) | |
Income tax payable increase | $ 4,700.00 | |
$ 56,300.00 | ||
Net cash from Operating Activities | $ 325,400.00 | |
Cash flows from investing activities: | ||
Cash received for sale of land | $ 35,000.00 | |
Cash used to purchase building | $(144,000.00) | |
Net cash from Investing Activities | $ (109,000.00) | |
Cash flows from financing activities: | ||
Cash used to purchase treasury stock | $ (32,000.00) | |
Cash received from issuing bonds | $ 206,000.00 | |
Dividends paid | $ (12,000.00) | |
Net cash from Financing Activities | $ 162,000.00 | |
Net change in cash during the year | $ 378,400.00 | |
Add: Beginning cash balance | $ 35,000.00 | |
Ending cash balance | $ 413,400.00 |
.General notes for cash flow
Cash is increased when Current liability increase or Current asset
Decrease.
Cash is Decreased when Current liability Decrease or Current asset
Increase.
Depreciation or loss on sale of any asset is a non cash expense
hence it will be added to net income to get operating cash
Profit on sale of asset or investment is a non cash profit and
hence will be deducted from operating income.