Question

LAG Network Inc.’s balance sheet and income statement are as follows:

LAG Network Inc.
Income Statement
For Year Ended December 31, 2017
Sales				$	933,600
Cost of goods sold					561,200
Gross profit				$	372,400
Operating expenses:
Depreciation expense	$	25,200
Other expenses		241,800
Total operating expenses					267,000
Profit from operations				$	105,400
Income taxes					23,600
Profit				$	81,800

LAG Network Inc.
Comparative Balance Sheet Information
	December 31
Assets	2017			2016
Cash	$	81,240		$	55,400
Accounts receivable		47,400			38,600
Merchandise inventory		278,160			254,800
Equipment		159,400			139,400
Accumulated depreciation		(76,800)			(51,600)
Total assets	$	489,400		$	436,600
Liabilities and Equity
Accounts payable	$	36,200		$	48,800
Income taxes payable		16,600			15,200
Common shares		368,000			330,000
Retained earnings		68,600			42,600
Total liabilities and equity	$	489,400		$	436,600

Additional information regarding LAG Network Inc.’s activities during 2017:

a. Equipment is purchased for $20,000 cash.
b. 15,200 common shares are issued for cash at $2.50 per share.
c. Declared and paid $55,800 of cash dividends during the year.

Required:
Prepare a statement of cash flows for 2017 that reports the cash inflows and outflows from operating activities according to the indirect method. (List any deduction in cash and cash outflows as negative amounts.)

	LAG NETWORK INC. Statement of Cash Flows For Year Ended December 31, 2017 Cash flows from operating activities: Adjustments to reconcile profit to net cash inflows from operating activities: $0 Cash flows from investing activities: 0 Cash flows from financing activities: 0 $0

Answer 1

Answer:-

LAG Network Inc
Statement of Cash Flow (Using Indirect Method)
For the year ended December 31, 2017
Particulars	Amount
	$
Cash flow from opreating activities
Net Income	81800
Adjustments to reconcile net income to net cash provided by opreating activities
Adjustment for non cash effects
Depreciation	25200
Change in opreating assets & liabilities
Increase in accounts receivable	-8800
Increase in inventory	-23360
Decrease in accounts payable	-12600
Increase in Income taxes payable	1400
Net cash flow from opreating activities (a)	63640
Cash Flow from Financing activities
Cash Dividend paid	-55800
Common stock issued	38000
Net cash Flow from Financing activities (b)	-17800
Cash Flow from Investing activities
Equipment purchased	-20000
Net cash Flow from Investing activities (c)	-20000
Net Channge in cash c=a+b+c	25840
Beginning cash balance	55400
Closing cash balance	81240