Question

E7-23 Enterprise Fund Statement of Cash Flows [LO 7-5]

Inglis City had a beginning cash balance in its enterprise fund of $895,635. During 2017, the following transactions occurred:

1.	Interest received on investments totaled $42,400.
2.	The city acquired additional equity investments totaling $75,000.
3.	A grant was received from the state in the amount of $50,000 for summer interns.
4.	Receipts from sales of goods or services totaled $2,915,500.
5.	Payments for supplies were made in the amount of $1,642,100.
6.	Payments to employees for salaries amounted to $479,300.
7.	Equipment was sold for $57,500. It had a book value of $56,625.
8.	$25,000 was transferred to the General Fund.
9.	Other cash expenses for operations were $89,200.
10.	Long-term debt payments totaled $525,000.

Required

Prepare a statement of cash flows for the Inglis City enterprise fund.

Can you provide the reconciliation of operating income to net cash provided by operating activities

Answer 1

Solution

INGLIS CITYENTERPRISE FUND

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2017

Particulars	Amount ($)	Amount ($)	Amount ($)
(A)Cash flows from operating activities:
Cash received from customers		2,915,500
Cash paid to:
Suppliers	(1,642,100)
Employees	(479,300)
Other	(89,200)	(2,210,600)
Net cash provided by operations			704,900
(B) CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES:
Grant from state for summer interns		50,000
Transfer to general fund		(25,000)
Net cash provided by noncapital financing activities			25,000
(C) CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES:
Proceeds from sale of capital assets		57,500
Debt payment		(525,000)
Net cash used by capital financing activities			(467,500)
(D) CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investments		(75,000)
Interest received on investments		42,400
Net cash provided by investing activities			(32,600)
NET INCREASE IN CASH AND CASH EQUIVALENTS (Total of A+ B+ C+D)			229,800
Add: CASH AND CASH EQUIVALENTS, 1/1/2017			895,635
CASH AND CASH EQUIVALENTS, 12/31/2017			1,125,435