Question

Below are comparative balance sheets for Tigger Inc. at December 31, 2018 and 2017:

	12/31/2018		12/31/2017
Cash	$ 21,900		$ 10,000
Accounts receivables (net)	50,000		45,000
Inventory	64,000		70,000
Land	0		32,000
Plant assets	580,000		560,000
Accumulated depreciation	(103,000)		(100,000)
	$612,900		$617,000
Accounts payable	$ 90,000		$ 93,000
Salaries payable	8,000		4,000
Dividends payable	1,700		2,300
Payable for general & admin expenses	18,000		10,000
Income tax payable	9,050		6,000
Bonds payable	40,700		104,000
Notes payable	40,000		40,000
Mortgage payable	22,000		20,000
Common stock	220,000		200,000
Retained earnings	163,450		137,700
	$612,900		$617,000

    

Additional information:

    

The income statement for 2018 is as follows:
Sales	$150,000
Cost of sales	(90,000)
Gross profit	$60,000
Operating expenses	(25,000)
Loss on sale of land	(4,500)
Income before income tax	30,500
Income tax expense	(3,050)
Net income	$ 27,450

i. The only changes to retained earnings were for net income and dividends declared for 2018.

     ii.                     Accounts payable were used only for inventory purchases.

     iii. Plant assets were acquired by exchanging common stock.

     iv.            Of the operating expenses, $2,825 is for depreciation.

     v. Land was sold for cash of $27,500.

Required:

Using the information above, prepare the Operating Activities section only of the calendar year 2018 Statement of Cash Flows for Tigger Inc. using the indirect method.

Below are comparative balance sheets for Tigger Inc. at December 31, 2018 and 2017:

	12/31/2018		12/31/2017
Cash	$ 21,900		$ 10,000
Accounts receivables (net)	50,000		45,000
Inventory	64,000		70,000
Land	0		32,000
Plant assets	580,000		560,000
Accumulated depreciation	(103,000)		(100,000)
	$612,900		$617,000
Accounts payable	$ 90,000		$ 93,000
Salaries payable	8,000		4,000
Dividends payable	1,700		2,300
Payable for general & admin expenses	18,000		10,000
Income tax payable	9,050		6,000
Bonds payable	40,700		104,000
Notes payable	40,000		40,000
Mortgage payable	22,000		20,000
Common stock	220,000		200,000
Retained earnings	163,450		137,700
	$612,900		$617,000

    

Additional information:

    

The income statement for 2018 is as follows:
Sales	$150,000
Cost of sales	(90,000)
Gross profit	$60,000
Operating expenses	(25,000)
Loss on sale of land	(4,500)
Income before income tax	30,500
Income tax expense	(3,050)
Net income	$ 27,450

i. The only changes to retained earnings were for net income and dividends declared for 2018.

     ii.                     Accounts payable were used only for inventory purchases.

     iii. Plant assets were acquired by exchanging common stock.

     iv.            Of the operating expenses, $2,825 is for depreciation.

     v. Land was sold for cash of $27,500.

Required:

Using the information above, prepare the Operating Activities section only of the calendar year 2018 Statement of Cash Flows for Tigger Inc. using the indirect method.

Below are comparative balance sheets for Tigger Inc. at December 31, 2018 and 2017: 12/31/2018 12/31/2017 Cash $ 21,900 $ 10,000 Accounts receivables (net) 50,000 45,000 Inventory 64,000 70,000 Land 0 32,000 Plant assets 580,000 560,000 Accumulated depreciation (103,000) (100,000) $612,900 $617,000 Accounts payable $ 90,000 $ 93,000 Salaries payable 8,000 4,000 Dividends payable 1,700 2,300 Payable for general & admin expenses 18,000 10,000 Income tax payable 9,050 6,000 Bonds payable 40,700 104,000 Notes payable 40,000 40,000 Mortgage payable 22,000 20,000 Common stock 220,000 200,000 Retained earnings 163,450 137,700 $612,900 $617,000 Additional information: The income statement for 2018 is as follows: Sales $150,000 Cost of sales (90,000) Gross profit $60,000 Operating expenses (25,000) Loss on sale of land (4,500) Income before income tax 30,500 Income tax expense (3,050) Net income $ 27,450 i. The only changes to retained earnings were for net income and dividends declared for 2018. ii. Accounts payable were used only for inventory purchases. iii. Plant assets were acquired by exchanging common stock. iv. Of the operating expenses, $2,825 is for depreciation. v. Land was sold for cash of $27,500. Required: Using the information above, prepare the Operating Activities section only of the calendar year 2018 Statement of Cash Flows for Tigger Inc. using the indirect method.

Answer 1

Statement of Cash Flow for Tigger Inc.
Operating Activities section only
(For the year 2018)
Net Income		$27450
Adjustments;
Depreciation	$2825
Loss on sale of land	$4500
Increase in accounts receivable	($5000)
Decrease in inventory	$6000
Decrease in Accounts payable	($3000)
Increase in Salaries payable	$4000
Decrease in Dividends payable	($600)
Increase in Payable for general & admin expenses	$8000
Increase in Income tax payable	$3050	$19775
Cash flow from operating activities		$47225

Note;

1. Increase in current assets is an outflow of cash that is why this is deducted from net income.

2. Increase in current liabilities is an inflow of cash that is why this is added to net income.

3. Decrease in current assets is an inflow of cash that is why this is added to net income.

4. Decrease in current liabilities is an outflow of cash that is why this is deducted from net income.

5. Depreciation is a non-cash item that is why it is added to net income.

6. Loss on sale of land is a non-operating and non-cash item that is why it is added to net income.