Question:

Accounting homework I need help I don't know how to prepare a statement of cash flow?

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Instructions:

1. Prepare the 20X8 statement of cash flows, formatting operating activities by using the indirect method.

2. How will what you learned in this problem help you evaluate an investment?

Current assets:

Cash and cash equivalents ..... $17,600 $5,300 $12,300

Accounts receivable ....................... 27,200 27,600 (400)

Inventories.............................. 83,600 87,200 (3,600)

Prepaid expenses............................ 2,500 1,900 600

Plant assets:

Land..................................... 89,000 60,000 29,000

Equipment,net ............... 53,500 49,400 4,100

Total assets..........................$273,400 $231,400 $ 42,000

Current liabilities:

Accounts payable.................... $ 35,800 $ 33,700 $2,100

Salary payable ............................... 3,100 6,600 (3,500)

Other accrued liabilities ................. 22,600 23,700 (1,100)

Long-term liabilities:

Notes payable................................ 75,000 100,000 (25,000)

Stockholders' equity:

Common stock, no-par.................. 88,300 64,700 23,600

Retained earnings .......................... 48,600 2,700 45,900

Total liabilities and stockholders’ equity..... $ 273,400 $ 231,400 $ 42,000

4 Season Supply Corp.

Income Statement for 20X8

Revenues:

Sales revenue ................................. $ 228,700

Expenses:

Cost of goods sold ......................... $ 70,600

Salary expense ............................... 27,800

Depreciation expense..................... 4,000

Other operating expense................ 10,500

Interest expense ............................. 11,600

Income tax expense ....................... 29,100

Total expenses ............................... 153,600

Net income……….. $ 75,100

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2 ANSWERS


  1. Indirect Method Cash Flow Statement

    Cash flows from operating activities

    Net income $75,100

    Adjustments for:

    Depreciation 4,000

    Changes in working capital-

    Decrease in Accounts receivable 400

    Decrease in inventories 3,600

    Increase in Prepaid expenses (600)

    Increase in Accounts payable 2,100

    Decrease in Salary payable (3,500)

    Decrease in Other accrued liabilities (1,100)

    Net cash from operating activities 80,000

    Cash flows from investing activities

    Purchase of land (29,000)

    Purchase of equipment (8,100)

    Net cash used in investing activities (37,100)

    Cash flows from financing activities

    Proceeds from issue of share capital 23,600

    Payment of notes payable (25,000)

    Dividends paid (29,200)

    Net cash used in financing activities (30,600)

    Net increase in cash and cash equivalents 12,300

    CCE at beginning of period 5,300

    CCE at end of period 17,600


  2. First, go back and re-read your text on the subject - it sounds to me you haven't grasped what is in the text, or you haven't read it yet.  Also, take a look at this link:

    http://en.wikipedia.org/wiki/Cash_flow_s...

    If that doesn't clear it up, try this one:

    http://www.bellaonline.com/articles/art4...

    Sorry, I'm not going to walk you through it as "accounting is best learned through the tip of a pencil."  Source - my former accounting professor.

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