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. Please show direct and indirect method

Answer 1

Inglis City
Statement of cash flows
	Amount $	Amount
Operating Activities
Receipt form sale of goods or services	$        2,915,500
Payment for supplies	$       (1,642,100)
Payment to employee for salaries	$          (479,300)
Operating expense paid	$            (89,200)
Transfer to general fund	$            (25,000)
cash flow from operating activities		$        679,900
Investing Activities
receipt of interest on investments	$             42,000
acquisition of equity investment	$            (75,000)
sale of equipment	$             57,500
cash flow from investing activities		$          24,900
Financing Activities
Grant received for summer ineterns	$             50,000
Long term debt payments	$          (525,000)
transfer to general fund	$             25,000
cash flow from financing activities		$       (450,000)
Net cash flows during the period		$        254,800
Add: Beginning Cash balance		$        895,635
Ending Cash Balance		$     1,150,435

Since net income is not given, hence reconciliation with net income is not possible, hence indirect method is not possible, so, direct method cash flow statement is presented.