Question

Complete the following using the information from the Study Questions and Problems at the end of Chapter 4, on pages 193 - 194, as indicated below:

Question 4.9 - Using the condensed financial statements for Dragoon Enterprises that are provided on page 193, you will need to provide information as follows:

(a) Dividends Dragoon paid.

(b) Information from the statement of cash flows using the indirect method including:

1. Net cash provided (used) by operations.

2. Net cash provided (used) by investing activities.

3. Net cash provided (used) by financing activities.

4. Net increase (decrease) in cash.

Question 4.10 - Using the income statements and changes in balance sheet accounts provided for Firms A and B, you will need to provide the following information:

(a) Dividends paid by Firms A and B.

(b) Information from the statement of cash flows for Firms A and B including:

1. Net cash provided (used) by operations.

2. Net cash provided (used) by investing activities.

3. Net cash provided (used) by financing activities.

4. Net increase (decrease) in cash.

(c) Summary analysis of the statements of cash flows for Firms A and B (see Exhibit 4.6 on page 181 of your textbook):

1. Total inflows for Firm A

2. Total outflows for Firm A

3. Total inflows for Firm B

4. Total outflows for Firm B

5. Using the information from the statements of cash flows and the summary analysis,

you will answer multiple-choice questions analyzing Firms A and B's cash flows.

CHAPTER 4 193 Statement of Cash Flows 49. Condensed financial statements for Dragoon Enterprises follow. (a) Calculate the amount of dividends Dragoon paid using the information given. (b) Prepare a statement of cash flows using the indirect method. Dragoon Enterprises Comparative Balance Sheets December 31, 2015 and 2014 2015 2014 Cash $1,200 $ 850 Accounts receivable 1,750 1,200 Inventory Plant and equipment Accumulated depreciation Long-term investments 1,250 1,360 4,600 3,900 (1,200) (1,100) 970 1,110 Totai Assets 8,570 1,100 7,320 Accounts payable Accrued wages payable Interest payable income tax payable Bonds payable Capital stock Paid-in capital Retained earnings Total Liabilities and Equity 800 250 350 70 120 200 50 1,100 1,400 1,000 930 400 70 3,600 4,450 $ 8,570 $7,320 Income Statement for Year Ended December 31, 2015 $9,500 Sales 6,650 Cost of goods sold Gross profit 2,850 Other expenses 1,200 Selling and administrative Depreciation 100 150 Interest 350 Income tax $1,050 Net income

Answer 1

Dragoon Enterprises Firm A&B 1050 75000 Statement of Cashflow For the period ending 31.12.2015 Cashflow from Operating Activity Net Income Adjustments: Depreciation Increase in Accounts Recveivable Decrease in Inventory Increase in Accounts Payable Decrease in Wages Payable Decrease in Interest Payable Increase in Income Tax Payable Cash generated from Operating Activity 100 -550 Statement of Cashflow - Firm A For the period ending 31.12.2015 Cashflow from Operating Activity Net Income Adjustments: Depreciation Increase in Accounts Receivable Increase in Inventory Decrease in Accounts Payable Increase in Notes Payable Cash generated from Operating Activity 110 10000 -40000 -40000 -20000 17000 300 -100 -50 150 -73000 2000 -40 1010 Cashflow from Investing Activity Equipment Purchased Cash used for Investing Activity -20000 -20000 Cashflow from Investing Activity Plant and Equipment Purchased Long Term Investments sold Cash used for Investing Activity -700 140 -560 Cashflow from Financing Activity Long Term Debt issued Deferred Taxes Dividends paid ( 70000 - 75000) Cash generated from Financing Activity Net Increase in Cash 20000 3000 -5000 18000 Cashflow from Financing Activity Bonds Payable redeemed Capital Stock issued Paid in Capital Dividends paid (3600+1050-4450) Cash used for Financing Activity Net Increase in Cash Beginning Cash Balance Ending Cash Balance -300 70 330 -200 -100 350 850 1200 75000 Statement of Cashflow - Firm B For the period ending 31.12.2015 Cashflow from Operating Activity Net Income Adjustments: Depreciation Increase in Accounts Receivable Decrease in Inventory Decrease in Accounts Payable Increase in Notes Payable Cash generated from Operating Activity Dividends paid Beginning Retained Earnings Net Income Ending Retained Earnings Dividends paid 3600 1050 -4450 200 30000 -5000 10000 -5000 2000 32000 107000 Cashflow from Investing Activity Equipment Purchased Cash used for Investing Activity -70000 -70000 Cashflow from Financing Activity Long Term Debt issued Deferred Taxes Dividends paid ( 40000 - 75000) Cash generated from Financing Activity Net Increase in Cash -10000 18000 -35000 -27000 10000