24E
Question
Use the Rouse Exercise Equipment data in Exercise E14-23. Prepare the company’s statement of cash flows—indirect method—for the year ended December 31, 2018. Assume investments are purchased with cash.
Step-by-Step Solution
VerifiedCash inflow from operating activity is $160,000.
Cash outflow from investing activity is $115,000
Cash outflow from financing activity is $44,000
The net cash inflow from all the above activities is $1,000
A cash flow statement shows the movement of cash in an organization. It is divided into three parts operating, investing, and financing activity
Particulars | Amount ($) | Amount ($) |
Cash flow from operating activity |
|
|
Net profit | 107,000 |
|
Add: Depreciation | 54,000 |
|
Less: Increase in account receivable | (11,000) |
|
Add: Decrease in inventory | 11,000 |
|
Add: Increase in account payable | 1,000 |
|
Less: Decrease in salary payable | (2,000) |
|
Cash flow from operating activity (A) |
| 160,000 |
|
|
|
Cash flow from investing activity |
|
|
Acquisition of plant asset | (92,000) |
|
Purchase of investment | (23,000) |
|
Cash flow from investing activity (B) |
| (115,000) |
|
|
|
Cash flow from financing activity |
|
|
Issue of shares | 11,000 |
|
Payment of dividend | (47,000) |
|
Payment of note payable | (8,000) |
|
Cash flow from Financing activity (C) |
| (44,000) |
Net Cash flow from all the activities (A+B+C) |
| 1,000 |
Add: Opening cash balance |
| 16,000 |
Closing cash balance |
| 17,000 |