Question

The controller of Neptune Corporation has provided you with the following information:
Neptune Corporation
Income Statement
For the Year Ended December 31, 2018

Sales Revenue	$77,500
Cost of Goods Sold	53,500
Gross Profit	24,000
Depreciation expense	16,500
Gain on Sale of Equipment	6,500
Net Income	14,000

Neptune Corporation

Comparative Account Information

Relating to Operations

For the Year Ended December 31

Assets	2018	2017
Cash	29,500	30,000
Accounts Receivable	17,000	12,000
Capital Assets	138,500	123,500
Accumultaed Depreciation	(89,000)	(83,500)
Total Assets	96,000	82,000

Liabilities AND shareholders Equity
Bonds Payable	24,500	23,000
Dividends Payable	4,000	2,500
Common Shares	15,500	11,000
Retained Earnings	52,000	45,500
Total Liabilities AND Shareholders Equity	96,000	82,000

Additional Information:
During 2018, equipment costing 20,000 was sold for cash.
During 2018, $10,000 bonds payable were issued in exchange for capital assets. There was no amortization of bond discount or premium.
Required
In good form, generate the Statement of Cash Flows for the year ended December 31, 2018, using the indirect method.

Answer 1

Solution:

Neptune Corporation
Statement of Cash Flows
For the year ended 2018
Particulars	Details	Amount
Cash Flow from Operating Activities:
Net Income	$14,000.00
Adjustments to reconcile net income to net cash provided by operations:
Depreciation Expense	$16,500.00
Gain on sale of equipment	-$6,500.00
Increase in accounts receivables	-$5,000.00
Net Cash provided (Used) by operating activities		$19,000.00
Cash Flow from Investing Activities:
Purchase of Capital assets ($138,500 - $123,500 + $20,000 - $10,000)	-$25,000.00
Sale of equipment ($20,000 - $11,000 + $6,500)	$15,500.00
Net Cash Provided (Used) by Investing activities		-$9,500.00
Cash Flow from Financing Activities:
Dividend Paid ($2,500 + $7,500 - $4,000)	-$6,000.00
Repayment of bonds ($23,000 + $10,000 - $24,500)	-$8,500.00
Proceed from issue of common stock	$4,500.00
Net Cash Provided (used) in financing activities		-$10,000.00
Net Increase / (Decrease) in Cash		-$500.00
Cash balance at beginning of year		$30,000.00
Cash balance at end of year		$29,500.00
Non Cash investing and financing activities:
Issue of bond in exchange of capital assets		$10,000.00