Question

The FOllowing information from the accounts of kesha Ltd for the year ended December 31, 2009 has been provided to you:

Net icome................................2,090,000

Amortization of intangible assert.............120,000

Proceeds from issue of ord. share...........1,030,000

Increase in inventory...............................180,000

Sale of building at shs 100,000 gain........850,000

Increase in accounts payable...........150,000

Purchase of computer equipment........1,250,000

Payments of cash dividends..............240,000

Depreciation expense...................350,000

Increase in accounts receivable...........230,000

Payment of mortagage.................520,000

Decrease in short-term notes payable.......80,000

Sale of land at shs 50,000 loss............260,000

Purchase of delivery truck.................330,000

Cash at the beginning of the year ......1,730,000

CAsh at the end of the year ................3,700,000

Required,

Cash flow statement for the kesha ltd for the year ended Dec.31, 2009.

Answer 1

Statement of cash flows

Particulars	$	$
Cash flow from Operating Activities
Net income	2,090,000
Add: Adjustments to reconcile net income to net cash provided by operating activities
Depreciation expense	350,000
Amortization of intangible asset	120,000
Loss on sale of land	50,000
Gain on sale of building	- 100,000
Changes in current operating assets and liabilities:
Increase in accounts receivable	- 230,000
Inventory increase	- 180,000
Accounts payable increase	150,000
Net cash provided by Operating Activities		2,250,000
Cash flow from Investing Activities
Sale of land	260,000
Purchase of computer equipment	- 1,250,000
Sale of building	850,000
Purchase of delivery truck	- 330,000
Net cash used in Investing Activities		- 470,000
Cash flow from Financing Activities
Issue of common stock	1,030,000
Decrease in short-term notes payable	- 80,000
Payment of mortgage	- 520,000
Dividend paid	- 240,000
Net cash provided by Financing Activities		190,000
Net increase in Cash and Cash Equivalents(I +II +III)		1,970,000
Add: Cash in the beginning of the period		1,730,000
Cash at the end of the period		3,700,000