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LING COMPANY

Statement of Cash Flows


For Year Ended December 31, 2015
Cash flows from operating activities
Profit before tax
Adjustments to reconcile profit to net cash
from operating activities
Depreciation expense
Decrease in accounts receivable

103,600
144,000
28,000

Increase in inventory
Increase in accounts payable
Cash generated from operations

(23,600)
18,800

Income tax paid


Net cash from operating activities

(31,400)

167,200
270,800

239,400

Income tax paid= Beginning balance + Income tax expense Ending


balance
= 8800+30,800-8200 = 31,400
Cash not needed to take into account as we are only using operating and
non-operating items thats not using cash
Decrease in accounts receivable from 128,000 to 100,000=-28,000
Increase in inventory from 216,400 to 240,000=23,600
Accounts payable increase from 102,800 to 121,600=18,800
Income tax payable is used to calculate income tax paid
and other operating activities

Indirect method

KITE CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Profit before tax
Adjustments to reconcile profit to net cash
from operating activities
Depreciation expense
Loss on disposal of equipment
Decrease in merchandise inventory
Decrease in accounts receivable
Decrease in accounts payable
Decrease in prepaid expense
Cash generated from operations
Income tax paid
Net cash from operating activities

$66,450
36,600
2,100
35,700
16,650
(6,000)
2,100

87,150
153,600

(9,450)
144,150

Cash flows from investing activities


Cash received from sale of equipment

$28,050

Cash paid for equipment

(38,250)

Net cash used in investing activities

(10,200)

Cash flows from financing activities


Cash borrowed on short term notes
Cash paid on long-term note
Cash received from issuing share
Cash paid for dividends

$6,000
(45,000)
33,000
(63,000)

Net cash used in financing activities

(69,000)

Net increase in cash

64,950

Cash balance at beginning of the year

71,550

Cash balance at the end of the year

Direct method

136,500

KITE CORPORATION
Statement of Cash Flows
For Year Ended December 31, 2015
Cash flows from operating activities
Cash received from customers
Cash paid for merchandise inventory
Cash paid for other operating expenses
Income tax paid
Net cash from operating activities

1,083,000
(555,300)
(390,750)
(9,450)
144,150

Cash flows from investing activities


Cash received from sale of equipment

$28,050

Cash paid for equipment

(38,250)

Net cash used in investing activities

(10,200)

Cash flows from financing activities


Cash borrowed on short term notes
Cash paid on long-term note
Cash received from issuing share
Cash paid for dividends
Net cash used in financing activities
Net increase in cash
Cash balance at beginning of the year
Cash balance at the end of the year

$6,000
(45,000)
33,000
(63,000)
(69,000)
64,950
71,550
136,500