Question

Presented below is the 2018 income statement and comparative balance sheet information for Tiger Enterprises.TIGER ENTERPRISESIncome StatementFor the Year Ended December 31, 2018($ in thousands)Sales revenue $ 15,000 Operating expenses: Cost of goods sold $ 5,000 Depreciation 400 Insurance 900 Administrative and other 3,400 Total operating expenses 9,700 Income before income taxes 5,300 Income tax expense 2,120 Net income $ 3,180 Balance Sheet Information ($ in thousands) Dec. 31,2018 Dec. 31, 2017Assets: Cash $ 620 $ 360 Accounts receivable 830 990 Inventory 810 760 Prepaid insurance 130 35 Plant and equipment 3,200 2,600 Less: Accumulated depreciation (1,160 ) (760 ) Total assets $ 4,430 $ 3,985 Liabilities and Shareholders' Equity: Accounts payable $ 380 $ 520 Payables for administrative and other expenses 380 560 Income taxes payable 360 310 Note payable (due 12/31/2019) 1,380 950 Common stock 1,100 960 Retained earnings 830 685 Total liabilities and shareholders' equity $ 4,430 $ 3,985 Required:Prepare Tiger’s statement of cash flows, using the indirect method to present cash flows from operating activities. (Hint: You will have to calculate dividend payments). (Enter your answers in thousands. Amounts to be deducted should be indicated with a minus sign.)

Answer 1

Net Income 3,180

Non-monetary terms:

Depreciation expense 400

Adjusted Income 3,580

Change in Working Capital:

Decrease in A/R 160

Increase in Inv (50)

Increase in Prepaid (95)

Increase Tax /P 50

Decrease in A/P (140)

Decrease in Other /P (180)

Change In Working Capital (255)

Cash-flow From Operating 3,325

Investing

Purchase of Equipment (600)

Financing

Note payable 430

From Issuance of Common Stock 140

Dividends Paid: (3,035)

Cash used for Financing (2,465)

Beginning Cash 360

Cash Flow 260

Ending Cash 620

Step-by-step explanation:

We first remove the non.monetary concepts from the net income.

Then we adjust for the change in working capital which are the increase and decrease in the current assets and liabilities account

Increase in asset and decrease in liabilities represent cash outflow

while the opposite is true when an asset decrease(convert to cash) or a liability increase (delay of the payment)

Dividends Paid Calculation:

Beginning R/E 685 + 3,180 Income - Ending R/E 830 = 3,035