Question

sales are credit sales, (2) all credics to 4ccounts receivable reflect cash receipts from customes, (3) purchases of inventory are on credit, (4) all debits to accounts payable reflect cash payments for in- Problem 17-1B vencory, and (S) ㏄ber expenses are paid in advance and are laitially deliled to Prepaid Expenses. Keller's bslance sheet and income statement folow Statement ol cash flows (direct method 002 Assets $123,esa s 61,550 77,10080,750 240,600 260,700 15,100 17,000 .262,250 200,000 Merchandise inventory Prepaid expenses -. For Year Ended Deoember 31, 2002 Sales Cost of goods soid -... Gross profit.... Operating expenses $1,185.000 (595,000) s 580,000 $607.750 $515,000 Total assets Liabilities and Equity Accounts payable Short-term notes payable Long-term notes payable . . . . Common stock, $5 par Contributed capital in excess 38,600 Depreciation expense.... Other expenses .1770 102,000 15,000 0,000 100,000 77,500 401450 Total operating experas Other gains (osses) . . . . . Loss on sale of equipment .. $186,450 28,350 $ 158,100 230,000 125,500 $807,760 $515 Retained earnings Total liabilties and equity

Answer 1

Requirement 1 Satement of Cash Flow Particulars Cash Flow From Operations (Direct Method) Received From Accounts Receivable Paid to creditors Income Tax Paid $11,88,650 -$10,30,100 -$28,350 $1,30,200 Cash Flow from investing Proceeds from sale of equipment Equipment Purchased $26,050 $43,250 -$17,200 Cash Flow from Financing Short term note borrowed Long term note repaid Common Stock issued Devidend paid $5,000 $47,500 $45,000 $53,600 -$51,100 $61,900 $61,550 $1,23,450 Net Change in Cash(A+B+C) Opening Cash Closing Cash Requirement 2 Cash flow from operation is positive which shows firms ability to generate cash from operations. Clash flow from investing activities is negative hich shows company is making investments for its continuity.Cash flow from Financing is negative which shows company is paying to its investor i.e. leanders (by way of repayment and interest) and Equity shareholders (by way of dividend). Company has paid dividend @ 25%.