Question

The following balance sheet (BS) and income statement (IS) are available for Little Bit Inc. Prepare a statement of cash flows (CF) for 2018:

Balance Sheet Cash Accounts Receivable (net) Inventory Prepaid Expenses Total Current Assets Plant and Equipment Less accumulated depreciation Plant and Equipment (net) Long-Term Investments Total Assets Accounts Payable Accrued Liabilities Total Current Liabilities Long-Term Debt Deferred Taxes Total Liabilities Common Stock ($1 par) and additional paid-in Retained earnings Total Liabilities and Equity December 31, 2018 2017 $ 40,000.00 $ 24,000.00 $ 48,000.00 $ 41,500.00 $ 43,000.00 $ 34,500.00 $ 19,000.00 | $ 15,000.00 $ 150,000.00 $ 115,000.00 $ 67,000.00 $ 61,000.00 $ (41,000.00) | $ (23,000.00) $ 26,000.00 $ 38,000.00 $ 90,000.00 $ 89,000.00 $ 266,000.00 $ 242,000.00 $ 13,000.00 $ 11,000.00 $ 55,000.00 $ 71,000.00 $ 68,000.00 $ 82,000.00 $ 25,000.00 $ 8,000.00 $ 4,000.00 $ 3,500.00 $ 97,000.00 $ 93,500.00 $ 112,000.00 $ 97,000.00 $ 57,000.00 $ 51,500.00 $ 266,000.00 $ 242,000.00 $ 155,000.00 $ 83,000.00 $ 72,000.00 Income Statement for 2018 Sales Cost of goods sold Gross Profit Selling and administrative $ 45,700.00 Depreciation $ 18,000.00 Total Operating Expenses Operating Profit Interest Expense Earnings before tax Tax Expense Net Income $ 63,700.00 $ 8,300.00 $ 2,000.00 $ 6,300.00 $ 800.00 $ 5,500.00

Answer 1

Cash Flow Statement
Particulars	Amount	Amount
Cash Flow from operating activities:
Income before tax		$        6,300.00
Adjustments to reconcile net income to:
Income statement items not affecting cash
Depreciation Expense	$      18,000.00
Changes in current operating assets and liabilities
Increase in Accounts Receivable	$       (6,500.00)
Decrease in Inventory	$       (8,500.00)
Increase in Prepaid Expenses	$       (4,000.00)
Increase in Accounts Payable	$        2,000.00
Decrease in Accrued Liabilities	$    (16,000.00)
Increase in Deferred Tax Payable	$           500.00
Net Cash Generated		$    (14,500.00)
Income Tax Paid		$          (800.00)
Net cash provided by operating activities	(A)	$       (9,000.00)
Cash Flows from Investing Activities
Purchase of Equipment	$       (6,000.00)
Purchase of Investment	$       (1,000.00)
Net cash provided by Investing activities	(B)	$       (7,000.00)
Cash Flows from Financing Activities
Issue of common stock	$      15,000.00
Increase in Long-term Debt	$      17,000.00
Net cash provided by Financing activities	(C')	$      32,000.00
Net increase/decrease in cash	(A+B+C)	$      16,000.00
Add:Opening cash balance		$      24,000.00
Closing cash balance		$      40,000.00