Question

Required:

1. Calculate the net cash flow from Operating, Investing & Financing activities using the Indirect Method
2. Calculate the cash flow increase or decrease using the Indirect Method

Bar Co. had the following transactions during the current financial reporting period.
Decrease in inventories $13,000
Increase in accounts payable $34,000
Decrease in income taxes payable $36,700
Decrease in wages payable $18,000
Proceeds on Sale of Equipment $80,000
Repayment of bonds $50,000
Net Income $86,000
Depreciation $20,000
Decrease in accounts receivable $35,000
Issuance of Common shares $10,000
Proceeds on sale of land $75,000
Gain on sale of land $25,000
Payment of dividends $40,000

Answer 1

Requirement 1:

(i)	Cash flows from operating activities:
	Net Income	$86,000
	Adjustments:
	Depreciation	$20,000
	Gain on sale of land	($25,000)
	Decrease in inventories	$13,000
	Decrease in accounts receivable	$35,000
	Increase in accounts payable	$34,000
	Decrease in income taxes payable	($36,700)
	Decrease in wages payable	($18,000)
	Net Cash flows from operating activities		$108,300
(ii)	Cash flows from investing activities:
	Proceeds on sale of land	$75,000
	Proceeds on Sale of Equipment	$80,000
	Net Cash flows from investing activities		$155,000
(iii)	Cash flow from financing activities:
	Payment of dividends	($40,000)
	Repayment of bonds	($50,000)
	Issuance of Common shares	$10,000
	Net Cash flow from financing activities		($80,000)

Requirement 2:

Net Cash flows from operating activities	$108,300
Net Cash flows from investing activities	$155,000
Net Cash flow from financing activities	($80,000)
Increase in cash flow	$183,300