Question

STATEMENT OF CASH FLOWS (INDIRECT METHOD)

The Group, Inc.

Consolidated Balance Sheets

(in thousands)

	Dec. 31, Year 2	Dec. 31, Year 1
ASSETS
Current assets:
Cash and cash equivalents	$ 92,069	$ 72,634
Accounts receivables, net	55,947	75,492
Inventories	50,784	53,129
Prepaid expenses	12,112	13,057
Total current assets	210,912	214,312
Equipment	145,444	134,312
Less: Accumulated depreciation	(50,515)	(36,689)
Total assets	$305,841	$311,935
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$ 25,466	$ 34,879
Accrued liabilities	40,574	40,722
Total current liabilities	66,040	75,601
Long-term debt	10,422	10,206
Stockholders’ equity:
Contributed capital	1,662	1,284
Retained earnings	227,717	224,844
Total stockholders’ equity	229,379	226,128
Total liabilities and stockholders’ equity	$305,841	$311,935

Consolidated Statement of Income

(in thousands)

	Year 2
Net sales	$130,896
Cost of sales	74,040
Gross profit	56,856
Operating expenses:
Selling, general & administrative expenses	33,211
Depreciation expense	13,826
Total operating expenses	47,037
Operating income	9,819
Interest income	239
Income before income taxes	10,058
Income tax expense	3,621
Net income	$   6,437

The Group, Inc. did not sell any equipment or repay any borrowings during the year ended December 31, Year 2. The company declared and paid dividends in the amount of $3,564 during the year ended December 31, Year 2.

Homework Assignment:

1. Using the information provided above, compute the net cash flow provided by (used in) operating, investing and financing activities using the indirect method.

2. Prepare a cash flow statement for the year ended December 31, Year

Answer 1