Question

Bls SS Cowo wold Wages and other propenses Incere expense Depreciation expense... $300.000 216.000 7 000 24.000 (547.000) 112.000 40.000 70,000 Other pines Gain on retirement of Loss one of plant 6.000 167000 Assets Current Cash Accounts receivable ..... Merchandise inventory Prepaid expenses .... Tocal current Long-term uses Pantat Accumulated depreciation Tool Liabilities Current habilidad Accounts payable...... 126.000 10.000 income we expense. Net income 210.000 148000 $288.000 $357.000 . 35.000 $40.000 40 Income esperable... Toel current des Long-term not able 60.000 90.000 150 000 12.000 56.000 64,000 120,000 Equity Common stock Recained earning p .. 95.000 112.000 10.000 88.000 Tools und 207 000 3.357.000 000 $288.000 Additional Information The accounts payable balances result from merchandise inventory purchases . Purchased $70,000 in plant assets by paying S10,000 cash and issuing 560.000 of notes payable. .. Sold plant assets with an original cost of $30,000 and accumulated depreciation of $12.000 for $12.000 cash. yielding a $6,000 loss. 1. Received SI5.000 cash from issuing 3.000 shares of common stock . Paid $18.000 cash to retire notes with a $34.000 book value, yielding a $16.000 gain. f. Declared and paid cash dividends of $14.000 Required: 1. Prepare the Cash accordey to the Flow Statement direct method.

Answer 1

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Cash Flow Direct Method	Amount $	Amount $			Workings
Cash Receipts from					Cash Received from sale
Cash Received from sale	570,000.00		See A		Opening Accounts Receivable	40,000.00
Total cash inflows		570,000.00			Add: Sales	590,000.00
Cash paid for Inventory purchased	319,000.00		See C		Less: Closing Accounts Receivable	60,000.00
Cash paid for Operating Expense	218,000.00		See D		Cash Received from sale	570,000.00	A
Interest paid	8,000.00		See E
Income Tax paid	5,000.00		See F		Inventory purchased
Total cash outflows		550,000.00			Cost of goods sold	300,000.00
Net Cash inflow from operating activities		20,000.00	J		Add: Closing Inventory	84,000.00
					Less: Opening Inventory	70,000.00
Cash Flow from Investing Activities					Inventory purchased	314,000.00	B
Plant assets purchased	(10,000.00)
Plant assets sold	12,000.00				Cash paid for Inventory purchased
Net Cash outflow from Investing Activities		2,000.00	K		Opening Accounts Payable	40,000.00
					Add: Purchases	314,000.00	See B
Cash Flow from Financing Activities					Less: Closing Accounts Payable	35,000.00
Retired Note Payable	(18,000.00)				Cash paid for Inventory purchased	319,000.00	C
Common stock issued during the year	15,000.00
Dividends paid	(14,000.00)				Cash paid for wages and other operating expenses
Net Cash inflow form Financing Activities		(17,000.00)	L		Wages and other operating expenses	216,000.00
					Add: Prepaid expense - closing	6,000.00
Net Increase in cash		5,000.00	M=J+K+L		Less: Prepaid expenses - opening	4,000.00
Add: Beginning Cash Balance		12,000.00	N		Cash paid for Other operating expenses	218,000.00	D
Ending cash Balance		17,000.00	O=M+N
					Interest paid
					Opening Interest Payable	4,000.00
					Add: Interest expense	7,000.00
					Less: Closing Interest Payable	3,000.00
					Interest paid	8,000.00	E
					Income Tax paid
					Opening Income Tax Payable	12,000.00
					Add: Income Tax expense	15,000.00
					Less: Closing Income Tax Payable	22,000.00
					Income Tax paid	5,000.00	F