Question

Statement of Cash Flows (Indirect Method) The Sky Company's income statement and comparative balance sheets as of December 31 of 2019 and 2018 follow: SKY COMPANY Income Statement For the Year Ended December 31, 2019 Sales Revenue $800,000 Dividend Income 19,000 819,000 Cost of Goods Sold $440,000 Wages and Other Operating Expenses 130,000 Depreciation Expense 39,000 Patent Amortization Expense 7,000 Interest Expense 13,000 Income Tax Expense 30,000 Loss on Sale of Equipment 5,000 Gain on Sale of Investments (10,000) 654,000 Net Income $165,000

Answer 1

Cash Flow Statement for year ended December 31, 2019
Particulars	Amount
CASH FLOW FROM OPERATING ACTIVITIES
Net profit after taxes	1,65,000 $
(+) Taxation	30,000 $
(+) Depreciation	39,000 $
(+) Loss on sale of equipment	5,000 $
(+) Patent Amortisation	7,000 $
(+) Interest Expense	13,000 $
(-) Gain on sale of investment	-10,000 $
(-) Dividend Income	-19,000 $
Operating profit before working capital changes	2,30,000 $
(-) Increase in inventories	-23,000 $
(-)Increase in receivables	-10,000 $
(-) Increase in prepaid expenses	-4,000 $
(+)Increase in Accounts payable	3,000 $
Operating profit before tax	1,96,000 $
(-) Taxes paid	-34,000 $
Cash Flow from Operating Activities (A)	1,62,000 $
CASH FLOW FROM INVESTING ACTIVITIES
Dividend Income	19,000 $
Equipment sold	14,000 $
Investment sold	60,000 $
Capital Expenditure on land	-95,000 $
Land purchased	-90,000 $
Cash Flow from Investing Activities (B)	-92,000 $
CASH FLOW FROM FINANCING ACTIVITIES
Dividend paid	-53,000 $
Proceed from other paid in capital	9,000 $
Proceed from issue of common stock	15,000 $
Long term Bonds issued	5,000 $
Interest paid	-12,000 $
Cash Flow From Financing Activities (C)	-36,000 $
Net cash flow from Operations (A+B+C)	34,000 $
Opening balance of Cash	29,000 $
Closing Cash Balance	63,000 $