Question

Condensed financial data of Ayayai Company for 2017 and 2016 are presented below.

AYAYAI COMPANY COMPARATIVE BALANCE SHEET AS OF DECEMBER 31, 2017 AND 2016
		2017			2016
Cash		$1,770			$1,170
Receivables		1,790			1,320
Inventory		1,610			1,940
Plant assets		1,910			1,680
Accumulated depreciation		(1,200)			(1,190)
Long-term investments (held-to-maturity)		1,300			1,420
		$7,180			$6,340
Accounts payable		$1,210			$910
Accrued liabilities		200			240
Bonds payable		1,370			1,560
Common stock		1,880			1,740
Retained earnings		2,520			1,890
		$7,180			$6,340

AYAYAI COMPANY INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2017
Sales revenue		$7,010
Cost of goods sold		4,730
Gross margin		2,280
Selling and administrative expenses		930
Income from operations		1,350
Other revenues and gains
Gain on sale of investments		80
Income before tax		1,430
Income tax expense		540
Net income		890
Cash dividends		260
Income retained in business		$630

Additional information:

During the year, $70 of common stock was issued in exchange for plant assets. No plant assets were sold in 2017.

Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

Prepare a statement of cash flows using the indirect method.

Cash flow from operating activities
Net income	890
Adjustment to reconcile net income
Depreciation expense	10
Gain on sale of investment	-80
Increase account receivable	-470
Decrease inventory	330
Increase account payable	300
Decrease accured liabilities	-40
Net cash flow from operating activities		940
Cash flow from investing activities
Sale of long term investment	200
Purchase of property,plant and equipment	-230
Net cash flow from investing activities		-30
Cash flow from financing activities
Bond repaid	-190
Issue common stock	140
Dividend paid	-260
Net cash flow from financing activiites		-310
Net cash flow		600
Beginning cash		1170
Ending cash		1770