Question

The following information is related to Alpha Company's fiscal year 2017. Income Statement S300,000 50,000 Gain on Sale of Plant Assets 10,000 500 Balance Sheet 12/31/17: Increase (Decrease) ($4,000) 250,000 Plant Assets - Disposals(100,000) Net Income Depreciation Expense Interest Expense Accounts Pavable Plant Assets - Purchased Additional Information: Cash Balance 12/31/2016: S50,000 Common Stock exchanged for outstanding Long Term Notes Payable of S125,000 Dividends paid were S25,000 Use this information to prepare the Statement of Cash Flows for Alpha Company using the indirect method

*PLEASE provide All three components of the cash flow statement: Operations, Investing, and Financing. Thanks!

Answer 1

Cash flow statement (indirect method)

Particulars	$	$
Cash flow from operating activities:
Net profit before tax and extraordinary items	300000
Adjustments for:
Depreciation	50000
Gain in for of plant	(10000)
Interest	500
Operating profit before working capital changes	340500
Adjustments for:
Decrease in Account payable	4000
Net cash from operating activities	344500	344500
Cash flows from investing activities:
Purchase of plant	(250000)
Sale of plant	100000
Net cash flow from investing activities	(150000)	(150000)
Cash flow from financing activities:
Dividend paid	(25000)
Interest expense	(500)
Net cash flow from financing activities	(25500)	(25500)
Net increase in cash & cash equivalents (A)		169000
Opening cash(B)		50000
Closing cash (A)+(B)		219000

Note: the transaction involving exchange of common stock does not involve cash flow and hence it will not be shown in the cash flow statement. However, it shall be shown as a footnote to the cash flow statement.