Question

A.) Prepare the Statement of Cash Flows for Franklin Heavy Equipment Company using the indirect method...

A.) Prepare the Statement of Cash Flows for Franklin Heavy Equipment Company using the indirect method
B.) Analyze by preparing a Summary Cash Analysis and by commenting as we did on homework.

Franklin Heavy Equipment Company

Income Statement

For the Year Ended December 31, 2017

(in thousands)

            Revenues                                                                  $9,000

            Depreciation expense                   $   650

            Other operating expenses                       7,100           7,750

            Income before income taxes                              $1,250

            Interest expense                                                          440

            Income tax expense                                                    270

            Net income                                                              $   540

Franklin Heavy Equipment Company

Balance Sheet

December 31, 2017 and 2016

                                    2017                        2016                                                            2017                         2016

Assets:                                                                       Liability & SE:

Cash                           $   230           $   480           A/P                             $ 370           $ 550

A/R                                  510                 590            Taxes Payable           120                  280

Inventories                    980                 960            LT debt                          910                830

Plant & Equipment   3,140          2,150           Common Stock       1,100                        1,350

Less: Acc. Depr.      (1,520)              (870)          Retained Earnings      840    300

Total Assets              $3,340          $3,310          Total Liab. & SE   $3,340        $3,310

Business   Accounting   
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Homework Answers

Answer #1
Cash flow indirect method
Cash flow from operating activities
Net income 540
Adjustments to reconcile the net income
Depreciation and amortization expense 650
Profit on investment
Changes in current asset and liabilities
decrease in accounts receivable 80
INcrease in inventory -20
decrease in accounts payable -180
Decrease in tax payable -160
370
Cash flow from operating activities 910
Cash flow from Investing activities
Purchase of equipment -990
Cash flow from Investing activities -990
Cash flow from Financing activities
Common stock -250
Dividend
Long term debt 80
Cash flow from Financing activities -170
Net Cash and cash equivalent -250
Add Beginning cash and cash equivalent 480
Ending cash and cash equivalent 230
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