PROBLEM 7-5

Prepare statement of cash flow using direct method

NIAGARA COMPANY
Statement of Cash Flows
For Year Ended December 31, Year 9

Cash Flows From Operating Activities

Cash Receipt From Customer 980
Cash Paid For Inventories -645
Cash Paid For Operating Expense -270
Net Cash From Operating Activites 65

Cash Flows From Investing Activities

Purchase Fixed Asset -50

Cash Flows From Financing Activities

Long Term Debt 50
Notes Payable to Bank -25
Divend cash From RE -30
Net Cash From Financing Activities -5
Net Increase in Cash 10
Beginning Cash Balance 50
Ending Cash Balance 60

NIAGARA COMPANY
Income Statement
For Year Ended December 31, Year 9
Sales 1000
Cost of goods sold -650
Depreciation expense -100
Sales and general expense -100
Interest expense -50
Income tax expense -40
Net income 60

Year 8 Year 9 Selisih

Assets
Cash 50 60 10
Accounts receivable, net 500 520 20
Inventory 750 770 20
Current assets 1300 1350 50
Fixed assets, net 500 550 50
Total assets 1800 1900
Liabilities and Equity
Notes payable to banks 100 75 -25
Accounts payable 590 615 25
Interest payable 10 20 10
Current liabilities 700 710 10
Long-term debt 300 350 50
Deferred income tax 300 310 10
Capital stock 400 400 0
Retained earnings 100 130 30
Total liabilities and equity 1800 1900