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During a recent year, Nicole’s Getaway Spa (NGS) reported net income of $3,150. The company reported...

During a recent year, Nicole’s Getaway Spa (NGS) reported net income of $3,150. The company reported the following activities: a. Increase in inventory of $330. b. Depreciation of $2,300. c. Increase of $2,100 in prepaid expenses. d. Payments of $3,900 on long-term debt. e. Purchased new spa equipment for $7,512. f. Payments on accounts payable exceeded purchases by $250. g. Collections on accounts receivable exceeded credit sales by $789. h. Issued $12,000 of common stock. Based on this information, prepare a statement of cash flows for the year ended December 31 using the indirect method. Assume the cash balance at the beginning of the year was $6,300.

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Answer #1

Statement of cash flow

Cash flow from operating activities
Net income 3150
Adjustment to reconcile net income to net cash flow from operating activities
Depreciation expense 2300
Increase inventory -330
Increase prepaid expense -2100
Increase account payable 250
Increase account receivable -789
-669
Net cash flow from operating activities 2481
Cash flow from investing activities
Purchase new equipmet -7512
Net cash used investing activities -7512
Cash flow from financing activities
Payment of long term debt -3900
Issue common stock 12000
Net cash flow from financing activities 8100
Net cash flow 3069
Beginning cash 6300
Ending cash 9369
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