Question

Analysts following the Cullumber Golf Company were given the following balance sheet information for the years ended June 30, 2017, and June 30, 2016:_______.

Assets 2017 2016
Cash and marketable securities $33,411 $16,566
Accounts receivable 278,305 318,768
Inventory 405,719 352,740
Other current assets 41,251 29,912
Total current assets $758,686 $717,986
Plant and equipment 2,173,719 1,609,898
Less: Accumulated depreciation (661,044) (206,678)
Net plant and equipment $1,512,675 $1,403,220
Goodwill and other assets 382,145 412,565
Total assets $2,653,506 $2,533,771
Liabilities and Equity 2017 2016
Accounts payable and accruals $378,236 $332,004
Notes payable 14,487 7,862
Accrued income taxes 21,125 16,815
Total current liabilities $413,848 $356,681
Long-term debt 663,481 793,515
Total liabilities $1,077,329 $1,150,196
Preferred stock - -
Common stock (10,000 shares) 10,000 10,000
Additional paid-in capital 975,465 975,465
Retained earnings 604,046 398,110
Less: Treasury stock (13,334) -
Total common equity $1,576,177 $1,383,575
Total liabilities and equity $2,653,506 $2,533,771
In addition, it was reported that the company had a net income of $2,679,848 and that depreciation expenses were equal to $454,366 during 2017. Assume amortization expense was $0 in 2017.
a. Construct a 2017 cash flow statement for this firm.
b. Calculate the net cash provided by operating activities for the statement of cash fl ows.
c. What is the net cash used in investing activities?
d. Compute the net cash provided by fi nancing activities.

Answer 1

Part a

Cullumber Golf Company

Statement of Cash flow for the Year ended 2017

Cash flow from Operating Activities

Net income $2,679,848

Adjustment for :

depreciation expenses $454,366

decrease in Accounts receivable ($40,463)

increase in Inventory ($52,979)

increase in Other current assets $11,339

increase in Accounts payable and accruals $46,232

Net Cash from Operating Activities $3,098,343

Cashflow from Investing Activities

Purchase of Plant and equipment ($563,821)

Proceeds from sale of Goodwill and other assets $30,420

Net Cash from Investing Activities $533,401

Cash flow from Financing Activities

increase in Notes payable $6,625

Repayment of Long-term debt ($130,034)

increase in Treasury stock ($13,334)

Dividends Paid ($2,473,912)

Net Cash from Financing Activities ($2,610,655)

Movement during the year $16,845

Beginning Cash and Cash Equivalents $16,566

Ending Cash and Cash Equivalents $33,411

Part b

$3,098,343

Part c

$533,401

Part d

($2,610,655)

Step-by-step explanation:

See Cash flow Statement prepared above using the Indirect method.

Calculation of Dividends Paid

Retained Earnings Schedule

Beginning Balance $398,110

Add Net Income during the Year $2,679,848

Less Ending Balance ($604,046)

Dividends Paid $2,473,912