Question

Condensed financial data of Buffalo Company for 2017 and 2016 are presented below. BUFFALO COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2017 AND 2016 2017 2016 Cash $1,780 $1,120 Receivables 1,750 1,300 Inventory 1,590 1,940 Plant assets 1,940 1,670 Accumulated depreciation (1,190 ) (1,140 ) Long-term investments (held-to-maturity) 1,300 1,400 $7,170 $6,290 Accounts payable $1,220 $880 Accrued liabilities 190 250 Bonds payable 1,380 1,570 Common stock 1,920 1,730 Retained earnings 2,460 1,860 $7,170 $6,290 BUFFALO COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017 Sales revenue $7,040 Cost of goods sold 4,800 Gross margin 2,240 Selling and administrative expenses 910 Income from operations 1,330 Other revenues and gains Gain on sale of investments 80 Income before tax 1,410 Income tax expense 550 Net income 860 Cash dividends 260 Income retained in business $600 Additional information: During the year, $120 of common stock was issued in exchange for plant assets. No plant assets were sold in 2017. Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

Cash Flow from Operating activities
Net Income		860
Adjustiment to reconcile Net income to net cash
Depreciation	50
Gain on Sale of Investment	-80
Increase in Receivable	-450
Decrease in Inventory	350
Increase in Accounts Payable	340
Decrease in Accrued Liability	-60	150
Net Cash Provided by Operating Activities		1010
Cash Flow from Investing activities
Sale of Held to maturity investment (1400-1300+80 Gain)	180
Purchase of Plant Asset (1670-1940=-270+120)	-150
Net Cash Provided by Investing Activities		30
Cash Flow from Financing activities
Issue of Common Stock 190-120	70
Bond Payable Redemption	-190
Payment of Dividend	-260
Net Cash Provided by Financing Activities		-380
Net Increase in Cash		660
Operning Cash		1120
Closing Cash		1780
Non Cash Investing and Financing Activities
Issue of Common Stock for Plant Asset		70