Presented below is the 2006 income statement and ...
Presented below is the 2006 income statement and comparative balance sheet information for Tiger Enterprises. Prepare Tiger's statement of cash flows using the indirect method to present cash flows from operating activities, need to complete the statement of cash flows, including the investing and financing activities. Then, prepare a statement of cash flows using the direct method to present cash flows from operating activities. Tiger Enterprises Income Statement For the Year Ended December 31, 2006 ($ in thousands) Sales Revenue $7,000 Operating expenses: Cost of goods sold $3,360 Depreciation 240 Insurance 100 Administrative & other 1,800 Total operating expenses $5,500 Income before income taxes 1,500 Income tax expense 600 Net income $900 Balance Sheet Information ($ in thousands) Dec. 31, 2006 Dec. 31, 2005 Assets: Cash $300 $200 Accounts receivable 750 830 Inventory 640 600 Prepaid insurance 50 20 Plant and equipment 2,100 1,800 Less: Accumulated depreciation (840) (600) Total assets $3,000 $2,850 Liabilities and Shareholders' Equity: Accounts payable $300 $360 Payables for administrative & other expenses 300 400 Income taxes payable 200 150 Note payable (due 12/31/2007) 800 600 Common stock 900 800 Retained earnings 500 540 Total liabilities and shareholders' equity $3,000 $2,850 Problems can be found in "Intermediate Accounting" (2007) by: Spiceland, J. Sepe, J. & Tomassini, L. (4th.ed.). Chapter 4. Pages 197 & 198. Problems E4-18 & E4-19. Thank you for your help. I am in an online accounting class.
E4-18)
Tiger Enterprises
Statement of Cash Flows
For the Year Ended December 31, 2006
($ in thousands)
Cash flows from operating activities:
Net income $ 900
Adjustments for noncash effects:
Depreciation expense 240
Decrease in accounts receivable 80
Increase in inventory (40)
Increase in prepaid insurance (30)
Decrease in accounts payable (60)
Decrease in administrative & other payables (100)
Increase in income taxes payable 50
Net cash flows from operating activities $1,040
Cash flows from investing activities:
Purchase of plant and equipment (300)
Cash flows from financing activities:
Proceeds from issuance of common stock 100
Proceeds from note payable 200
Payment of dividends (1) (940)
Net cash flows from financing activities (640)
Net increase in cash 100
Cash, January 1 200
Cash, December 31 $ 300
(1)
Retained earnings, beginning $540
+ Net income 900
- Dividends x x = $940
Retained earnings, ending $500
E4-19)
The T-account analysis of the transactions related to operating cash flows is shown below. To derive the cash flows, the beginning and ending balances in the related assets and liabilities are inserted, together with the revenue and expense amounts from the income statements. In each balance sheet account, the remaining (plug) figure is the other half of the cash increases or decreases.
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Based on the information in the T-accounts above, the operating activities section of the SCF for Tiger Enterprises would be as shown below.
Tiger Enterprises
Statement of Cash Flows
For the Year Ended December 31, 2006
($ in thousands)
Cash flows from operating activities:
Collections from customers $ 7,080
Prepayment of insurance (130)
Payment to inventory suppliers (3,460)
Payment for administrative & other exp. (1,900)
Payment of income taxes (550)
Net cash flows from operating activities $ 1,040
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