Question

Demonstration Problem Chapter 14 The Carpet Company's 2014 and 2015 balance sheets included the following items: December 31 2015 2014 Debits $ 4,000 9,000 18,000 15,000 $46,000 $10,500 8,000 21,000 18,000 $57,500 Cash Accounts receivable Merchandise inventory Equipment.... Totals.. Credits $ 4,000 7,000 1,000 1,500 27,000 6,000 11,000 $57,500 $3,000 5,000 2,000 Accumulated depreciation, equipment. Accounts payable Taxes payable.. Dividends payable.. Common stock, $10 par value Contributed capital in excess of par, common stock Retained earnings. 25,000 5,000 6,000 $46,000 Totals.... The Carpet Company's income statement was as follows: CARPET COMPANY Income Statement For the Year Ended December 31, 2015 $61,000 Sales Cost of goods sold... Wages and other operating expenses $40,000 6,300 4,200 1.500 Income taxes expense. 52,000 9,000 Depreciation expense. Net income....

Answer 1

2 Amount (in S) 9000 1500 5200 15700 1 Carpet Company Cash flow statement 3 Particulars 4. Profit As per Income Statement 5 Add: Non cash Expenses 6 Depreciation for the year 7 Provision for taxation 8 Cash Profit 9 10 Cash flow from operating Activities Add: Increase in Current Liabilities & Decrease in Current 11 assets 12 Account Payable 13 Account receivable Less: Decrease in Current Liabilities & increase in Current 14 assets 15 Merchandise Inventory 16 Total 17 Less: Taxes Paid - (7000-5000) (8000-9000) 2000 10000 (21000-18000) 3000 13700 5200 8500 18 Cash flow from operating activities (A) 19 20 Cash flow from Investing Activities 21 Purchase of Equipment -3500

22 -3500 (6000-5000) (200*10) 23 Cash flow from Investing Activities (B) 24 25 Cash flow from Financing Activities 26 Increase in contributed Capital 27 Issue of Common Stock 28 Dividend paid 29 Increase in retained Earning 30 Cash flow from Financing Activities © 31 32 Cash flow business activities (A+B+C) 33 Opening cash flow 1000 2000 -2500 1000 1500 6500 4000 34 35 Closing Cash Flow statement 10500

Notes: Purpose off cash flow statement is to matching of opening cash with the closing cash balance. So, all non cash expenses should be added back and they do not reflect the actual cash payments. Like depreciation and provision of tax. -Dividend actually paid will be taken into account as Declaration of dividend will not affect the cash outflow. Asset disposed shall not have any effect on cash flow as no cash is realized during disposition of assets. Actual tax paid is calculated as below:

Tax Payable Alc Particulars Amount ($) Particulars Amount ($) By balance B/d To Cash 5200 2000 (tax paid) Bal Fig) By Income Statement 4200 To balance c/d 1000 6200 6200