E-17 4

Statement of cashflow from operating activities(Indirect Method)

Particular Amount
Net Income 225000
Adjustments to recoincile net incom to net cash income
Depriciation Expense 45000
Loss on Disposal of equipment 5000
Decrease in account receiveable 15000
Increase in account payable 17000
Decreasein prepaid expenses 4000
net cash inflow from operating activities 311000
The classification are as follows

(a) Payment of interest on notes payable = Operating activities as cash outflow

(b) Exchange of land for patent = Non cash investing activity as it does not involve cash transactions

(c) Sale of building at book value = Investing activities as cash inflow which is represented in a positive sign
(d) Payment of dividends. = Financing activities as cash outflow which is represented in a negative sign

(e) Depreciation = It is added to net income and shown in operating activities

(f) Receipt of dividends on investment in stock = Operating activities as cash inflow

(g) Receipt of interest on notes receivable = Operating activities as cash inflow

(h) Issuance of common stock = Financing activities as cash inflow
(i) Amortization of patent = Operating activities as cash inflow and added to the net income
(j) Issuance of bonds for land = Non cash investing activity as it does not involve cash transactions

(k) Purchase of land = Investing activities as cash inflow which is represented in a negative sign
(l) Conversion of bonds into common stock. = Non cash investing activity as it does not involve cash transactions
(m) Sale of land at a loss = Investing activities as cash inflow which is represented in a positive sign
(n) Retirement of bonds = Financing activities as cash outflow
P-17 7A

NOSKER COMPANY

Statement of Cash Flow - Indirect Method

For The Year Ended December 31, 2017

Cash flow from operating activities:

Net income
Adjustments:
Depreciation expense

Increase in accounts receivable

Increase in inventory

Increase in accounts payable

Decrease in income tax payable

Net cash flow from operating activities

Cash flow from investing activities:

Proceeds from sale of equipment

Net cash flow from investing activities

Cash flow from financing activities:

Redemption of bonds payable

Issue of common stock

Dividend paid
Net cash flow from financing activities

Net increase (decrease) in cash

Beginning cash balance
Ending cash balance

b. Free cash flow = Operating cash flow - Dividend

Free cash flow = $31,500 - 20,000 = $11,500

 $32,000

$14,500

-16,000

-7,000

9,000

-1,000 -500

31,500

8,500

8,500

-6,000

4,000
-20,000
 -22,000

18,000
20,000
$38,000
Statement of cash flow
Cash Flow from operating activities

Net income 158900

Adjustments to recoincile net income to net cash provided by operating activities

Depriciation expense 46500
loss on disposal of plant assets 7500

change in current assets and liabilities

increase in A/c receiveable -59800
increase in inventory -14650
increase in prepaid expenses -2400
increase in A/c payable 44700
decrease in accrued expenses payable -500

net cash provided by operating activities

Cash flow from investing activities
purchase of investments -29000
purchase of equipment -85000
sale of equipment 1500
net cash used in investing activities
cash flow from financing activities
issuance of common stock 45000
redemption o bonds -40000
Payment of divident -40350
net cash provided by financing activities
Net increase in cash
Add: cash balance at the beginning of year

cash balance at the end of the year

 21350
180250

-112500

-35350
32400
48400

80800