Question

Flint Inc., a greeting card company, had the following statements prepared as of December 31, 2017.

FLINT INC. COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2017 AND 2016
		12/31/17			12/31/16
Cash		$5,900			$6,900
Accounts receivable		61,400			50,800
Short-term debt investments (available-for-sale)		35,000			17,800
Inventory		40,000			59,400
Prepaid rent		5,000			3,900
Equipment		155,200			129,000
Accumulated depreciation—equipment		(35,000	)		(25,000	)
Copyrights		45,600			49,900
Total assets		$313,100			$292,700
Accounts payable		$46,300			$39,800
Income taxes payable		3,900			6,100
Salaries and wages payable		7,900			3,900
Short-term loans payable		8,000			10,100
Long-term loans payable		60,100			68,400
Common stock, $10 par		100,000			100,000
Contributed capital, common stock		30,000			30,000
Retained earnings		56,900			34,400
Total liabilities & stockholders’ equity		$313,100			$292,700

FLINT INC. INCOME STATEMENT FOR THE YEAR ENDING DECEMBER 31, 2017
Sales revenue				$338,600
Cost of goods sold				174,500
Gross profit				164,100
Operating expenses				119,100
Operating income				45,000
Interest expense		$11,400
Gain on sale of equipment		1,900		9,500
Income before tax				35,500
Income tax expense				7,100
Net income				$28,400

Additional information:

1.		Dividends in the amount of $5,900 were declared and paid during 2017.
2.		Depreciation expense and amortization expense are included in operating expenses.
3.		No unrealized gains or losses have occurred on the investments during the year.
4.		Equipment that had a cost of $20,100 and was 70% depreciated was sold during 2017.

Prepare a statement of cash flows using the direct method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

	FLINT INC.
	Statement of Cash Flow From Direct method
	AS OF DECEMBER, 2017
					Amount in $
	Cash Flow from Operating Activities
	Cash Received From Customers (Note-1)				328000
	Less :Cash Payment
	Cash paid for inventory (Note-2)			-148600
	Cash paid for Operating Expenses (Note-4)			-87830
	Cash paid for Interest			-11400
	Cash paid for Income Tax (Note-5)			-9300
	Net Cash Flow from operating Activities (A)				70870
	Cash Flow from Investing Activities
	Sale of Equipment (20100*30% +1900)				7930
	Purchase of Short term debt Investments (35000-17800)				-17200
	Purchase of Equipment (155200+20100-129000)				-46300
	Net Cash Used from Investing Activities (B)				-55570
	Cash Flow from Financing Activities
	Cash paid for dividends				-5900
	Cash paid for Short term loan payable				-2100
	Cash paid for Long term loan payable				-8300
	Net Cash Used from operating Activities ( C )				-16300
	Net increase (Decrease) in Cash (A+B+C)				-1000
	Cash balance beginning of the year				6900
	Cash balance at end of the year				5900
	Note-1
	Cash Received From Customers
	Beginning Account receivable		50800
	Add : Sale		338600
	less : Ending Accounting Receivable		-61400
			328000
	Note-2
	Cash Paid for Inventory
	Beginning Account payable		39800
	add : cost of goods sold		174500
	less : Ending Account Payable		-46300
	Less : Beginning Inventory		-59400
	Add : Ending Inventory		40000
			148600
	Note-3
	Depreciation of the year
	Add: Depreciation on Sale of the Year		14070
	less : Ending Accumulated Depreciation		35000
	Beginning Accumulated Depreciation		-25000
			24070
	Note-4
	Cash Paid for Operating Expenses
	As per income Statement		119100
	less : Amortization of Copyrights (49900-45600)		-4300
	less : Depreciation		-24070
	beginning Salaries & wages payable		3900
	Less : Ending Salaries & wages payable		-7900
	Less : beginning Prepaid Rent		-3900
	Add : Ending Prepaid Rent		5000
			87830
	Note-5
	Cash Paid for Income tax
	Beginning Income Tax payable		6100
	add : Income tax		7100
	less : Ending Income Tax Payable		-3900
			9300