Question

Analysts were given the following balance sheet information for the years ended June 30, 2016 and June 30, 2015:

Assets	2016	2015
Cash and Marketable Securities	$38,104	$25,631
Accounts Receivable	$342,742	$216,708
Inventory	$332,760	$429,860
Other Current Assets	$105,809	$85,672
Total Current Assets	$819,415	$757,871
Gross Plant and Equipment	$2,050,368	$1,859,234
Less: Accumulated Depreciation	($432,560)	($386,720)
Net Plant and Equipment	$1,617,808	$1,472,514
Goodwill and Other Assets	$286,539	$312,672
Total Assets	$2,723,762	$2,543,057
Liabilities and Equity	2016	2015
Accounts Payable	$332,450	$389,321
Notes Payable	$25,769	$35,870
Accrued Income Taxes	$42,870	$35,680
Total Current Liabilities	$401,089	$460,871
Long-Term Debt	$805,642	$701,830
Total Liabilities	$1,206,731	$1,162,701
Common Stock	$100,000	$100,000
Additional Paid-In Capital	$546,802	$546,802
Retained Earnings	$870,229	$733,554
Total Common Equity	$1,517,031	$1,380,356
Total Liabilities and Equity	$2,723,762	$2,543,057

In addition, it was reported that the company had a net income of $4,685,213 and that depreciation expenses were equal to $45,840 during 2016.

Construct a 2016 cash flow statement and statement of retained earnings for this firm and include:

1.) net cash from operating activities

2.) net cash used in investing activities

3.) net cash provided by financing activities

Answer 1

	Statement of Cash Flows
	For the Year Ended June 30, 2016
	Cash flows from operating activities:
	Net income		$4,685,213
	Add (deduct) items not affecting cash:
	Depreciation expense	$45,840
	Amortization expense	$26,133
	Increase in accounts receivable	-$126,034
	Decrease in inventory	$97,100
	Increase in other current assets	-$20,137
	Decrease in accounts payable	-$56,871
	Decrease in note payable	-$10,101
	Increase in accrued income taxes	$7,190
			-$36,880
	Net cash provided by operating activities		$4,648,333
	Cash flows from investing activities:
	Purchases of plant & equipment	-$191,134
	Net cash used in investing activities		-$191,134
	Cash flows from financing activities:
	Proceeds from long-term debt	$103,812
	Payment of dividends	-$4,548,538
	Net cash provided by financing activities		-$4,444,726
	Net increase in cash for the year		$12,473
	Cash and cash equivalent on June 30, 2015		$25,631
	Cash and cash equivalent on June 30, 2016		$38,104
1	net cash from operating activities	$4,648,333
2	net cash used in investing activities	-$191,134
3	net cash provided by financing activities	-$4,444,726