Question

Presented below is the 2021 income statement and comparative balance sheet information for Tiger Enterprises.

TIGER ENTERPRISES
Income Statement
For the Year Ended December 31, 2021
($ in thousands)
Sales revenue								$	7,960
Operating expenses:
Cost of goods sold		$	3,520
Depreciation expense			400
Insurance expense			260
General and administrative expense			1,960
Total operating expenses									6,140
Income before income taxes									1,820
Income tax expense									(760	)
Net income								$	1,060
Balance Sheet Information ($ in thousands)	Dec. 31,2021						Dec. 31, 2020
Assets:
Cash		$	460					$	360
Accounts receivable			910						990
Inventory			800						760
Prepaid insurance			130						100
Equipment			2,900						2,600
Less: Accumulated depreciation			(1,160	)					(760	)
Total assets		$	4,040					$	4,050
Liabilities and Shareholders' Equity:
Accounts payable		$	460					$	520
Accrued liabilities (for general & administrative expense)			460						560
Income taxes payable			360						310
Notes payable (due 12/31/2022)			960						760
Common stock			1,060						960
Retained earnings			740						940
Total liabilities and shareholders' equity		$	4,040					$	4,050

Required:
Prepare the cash flows from operating activities section of Tiger's 2021 statement of cash flows using the direct method. Assume that all purchases and sales of inventory are on account, and that there are no anticipated bad debts for accounts receivable. (Amounts to be deducted should be indicated with a minus sign. Enter your answers in thousands.)

Answer 1

Working :

1)collection from customers =Beginning accounts receivable +sales -ending accounts receivables

                  = 990 +7960 -910

                   = 8040

2)Purchase =Cost of goods sold +ending inventory -beginning inventory

             = 3520+800-760

            = 3560

Payment to suppliers=Beginning accounts payable +purchase -ending accounts payables

                = 520 +3560 -460

                = 3620

3)payment for insurance =Ending prepaid insurance + insurance expense-beginning PI

                        = 130 +260 - 100

                        = 290

4)PAYMENT for general and administrative expense =Beginning accrued liabilities+expense -ending accrued liabilities

                = 560+1960 -460

                   = 2060

5)payment for income tax expense =Beginning income tax payable +expense -ending income tax payable

           = 310+760-360

          = 710

6)

dividend paid =Retained earning at beginning +net income -RE at end

             =940+1060-740

               =1260

TIGER ENTERPRISES CASH FLOW STATEMENT(DIRECT) FOR THE YEAR ENDED DECEMBER 31,2021
Cash flow from operating activity
Collection from customers (1)	8040
less:
payment to suppliers (2)	-3620
payment for Insurance (3)	-290
Payment for general and administrative expense (4)	-2060
payment of income tax expense (5)	-710
Net cash flow from operating activity [A]		1360
Cash flow from investing activity
purchase of equipment [2900-2600]	-300
Net cash flow from investing activity [B]		-300
Net cash flow from financing activity
issue of note payable [960-760]	200
Issue of common stock [1060-960]	100
cash dividend paid	-1260
Net cash flow from financing activity [C]		-960
Net increase/(decrease)in cash during the year [A+B+C]		100
Cash at beginning		360
cash at end		460