Question

Presented below is the 2021 income statement and comparative balance sheet information for Tiger Enterprises.

TIGER ENTERPRISES
Income Statement
For the Year Ended December 31, 2021
($ in thousands)
Sales revenue								$	9,000
Operating expenses:
Cost of goods sold		$	3,800
Depreciation expense			280
Insurance expense			300
General and administrative expense			2,200
Total operating expenses									6,580
Income before income taxes									2,420
Income tax expense									(968	)
Net income								$	1,452
Balance Sheet Information ($ in thousands)	Dec. 31,2021						Dec. 31, 2020
Assets:
Cash		$	380					$	240
Accounts receivable			770						870
Inventory			700						640
Prepaid insurance			90						40
Equipment			2,500						2,000
Less: Accumulated depreciation			(920	)					(640	)
Total assets		$	3,520					$	3,150
Liabilities and Shareholders' Equity:
Accounts payable		$	320					$	400
Accrued liabilities (for general & administrative expense)			320						440
Income taxes payable			220						190
Notes payable (due 12/31/2022)			1,040						800
Common stock			980						840
Retained earnings			640						480
Total liabilities and shareholders' equity		$	3,520					$	3,150

Required:
Prepare Tiger’s statement of cash flows, using the indirect method to present cash flows from operating activities. (Hint: You will have to calculate dividend payments).

Answer 1

TIGER ENTERPRISES
Statement of Cash Flows
For the Year Ended December 31, 2021
Cash Flow From Operating Activities:
Net income	$1,452
Adjustments to reconcile net income to net cash provided by operations:
Depreciation Expense	$280
Decrease in Accounts Receivable (870-770)	$100
Increase in Inventory (700-640)	-$60
Increase in Prepaid insurance (90-40)	-$50
Decrease in Accounts payable (400-320)	-$80
Decrease in Accrued liabilities (for general & administrative expense) (440-320)	-$120
Increase in Income taxes payable (220-190)	$30
Net Cash provided by Operating Activities		$1,552
Cash Flow From Investing Activities:
Purchase of Equipment (2500-2000)	-$500
Net Cash used in Investing Activities:		-$500
Cash Flow From Financing Activities:
Issue of Notes payable (1040-800)	$240
Dividend paid	-$1,292
Issue of common stock (980-840)	$140
Net Cash used in Financing Activities		-$912
Net increase (decrease) in Cash for the year		$140
Beginning Cash Balance		$240
Closing Cash Balance		$380
Calculation of Dividend paid :-
Opening Balance of Retained Earnings	$480
Add: Net Income	$1,452
Less: Closing Balance of Retained Earnings	$640
Dividend paid	$1,292