Question

The following information relates to the Cisco Corporation for the years ended December 31.

Cisco Corporation

Comparative Balance Sheets

December 31

Assets	2019		2018
Cash	$ 92,700		$ 33,400
Accounts receivable	70,800		37,000
Inventory	131,900		102,650
Investments	84,500		107,000
Equipment	310,000		205,000
Accumulated depreciation - equipment	(49,500)		(40,000)
Total	$640,400		$445,050
Liabilities and Stockholders’ Equity
Accounts payable	$ 62,700		$ 48,280
Accrued expenses payable	15,100		18,830
Bonds payable	140,000		70,000
Common stock	250,000		200,000
Retained earnings	172,600		107,940
Total	$640,400		$445,050

Cisco Corporation Income Statement For the Year Ended December 31, 2019
Sales revenue	$		$297,500
Gain on sale of plant assets			5,000
			302,500
Less:
Cost of goods sold	$119,460
Operating expense excluding depreciation	14,670
Depreciation expense	35,500
Income tax expense	27,270
Interest expense	2,940		199,840
Net income			$102,660

Additional information:

1.   New equipment costing $141,000 were purchased for cash during the year.

2.   Investments were sold at cost.

3.   Old equipment costing $36,000 were sold for $15,000. The equipment had a book value of $10,000 at the time of the sale..

4.    A cash dividend of $38,000 was declared and paid during the year

Instructions:

Prepare a statement of cash flows for the year ended December 31, 2019 using the indirect method.

Answer 1

No.	Conceptual Notes
1	Cash Flow Statement reflects the Cash Inflows and Outflows during a period of time.
2	Effects of Non - Cash Transaction are adjusted from Net Income.
3	Depreciation Expense, Amortisation expenses are Added back to Net Income in Cash Flow Statement.
4	Decrease in Current Assets OR Increase in Current Liabilities are ADDED to Net Income
5	Increase in Current Assets OR Decrease in Current Liabilities are DEDUCTED from Net Income

--Requirement

Statement of cash flows
for the year ended December 31, 2019 using the
A. Cash Flows from Operating Activities
Net Income		$102,660
Adjustment to Nreconcile net cash to Net Income
Depreciation expense	$35,500
Gain on Sale of Old Equipment [15000 - 10000]	($5,000)
Increase in Accounts receivables	($33,800)
Increase in Inventory	($29,250)
Increase in Accounts Payable	$14,420
Decrease in Accrued Expenses Payable	($3,730)	($21,860)
Net Cash Provided from Operating Activities		$80,800
B. Cash Flows from Investing Activities
Purchase of Equipment	($141,000)
Sale of Investment	$22,500
Sale of Old Equipment	$15,000
Net Cash Flows from Investing Activities		($103,500)
C. Cash Flows from Financing Activities
Issue of Bonds Payable	$70,000
Issue of Common Stock	$50,000
Dividends	($38,000)
Net Cash flows from financing activities		$82,000
Net Increase (Decrease) during the period		$59,300
Cash at the beginning		$33,400
Cash at the end		$92,700