Q28E
Question
Question: Preparing the statement of cash flows—direct method The income statement and additional data of Value Corporation follow:
- Collections from customers are \(13,000 more than sales.
- Dividend revenue, interest expense, and income tax expense equal their cash amounts.
- Payments to suppliers are the sum of cost of goods sold plus advertising expense.
- Payments to employees are \)3,000 more than salaries expense.
- Cash payment for the acquisition of plant assets is \(102,000.
- Cash receipts from sale of land total \)29,000.
- Cash receipts from issuance of common stock total \(38,000.
- Payment of long-term notes payable is \)10,000.
- Payment of dividends is \(9,000.
- Cash balance at June 30, 2017, was \)21,000; at June 30, 2018, it was $43,000.
Prepare Value Corporation’s statement of cash flows for the year ended June 30, 2018. Use the direct method.
Step-by-Step Solution
VerifiedAnswer
Net cash provided by operating activities is $76,000.
Cash flows from operating activities |
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Receipts: |
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Collection from customers | $246,000 |
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Collection of dividend revenue | $7,000 |
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Payments: |
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To suppliers | ($116,000) |
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To employees | ($51,000) |
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For income tax | ($7,500) |
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For Interest | ($2,500) |
|
Net cash provided by operating activities |
| $76,000 |
Value Corporation. Statement of cash flows Year ended 31st December, 2018 | ||
Cash flows from operating activities |
| $76,000 |
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|
|
Cash flows from investing activities |
|
|
Cash purchase of plant | ($102,000) |
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Cash receipts from sale of land | $29,000 |
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Net cash used for investing activities |
| ($73,000) |
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|
|
Cash flows from financing activities |
|
|
Cash receipts from issuance of common stock | $38,000 |
|
Cash payment of note payable | ($10,000) |
|
Cash payment of dividend | ($9,000) |
|
Net cash provided by financing activities |
| $19,000 |
Net Increase/(Decrease) in cash |
| $22,000 |
Cash balance, December 31, 2017 |
| $21,000 |
Cash balance, December 31, 2018 |
| $43,000 |