Question

Presented below is the 2018 income statement and comparative balance sheet information for Tiger Enterprises.

TIGER ENTERPRISES
Income Statement
For the Year Ended December 31, 2018
($ in thousands)
Sales revenue								$	13,000
Operating expenses:
Cost of goods sold		$	4,600
Depreciation			360
Insurance			700
Administrative and other			3,000
Total operating expenses									8,660
Income before income taxes									4,340
Income tax expense									1,736
Net income								$	2,604
Balance Sheet Information ($ in thousands)	Dec. 31,2018						Dec. 31, 2017
Assets:
Cash		$	540					$	320
Accounts receivable			810						950
Inventory			750						720
Prepaid insurance			170						80
Plant and equipment			3,300						2,400
Less: Accumulated depreciation			(1,080	)					(720	)
Total assets		$	4,490					$	3,750
Liabilities and Shareholders' Equity:
Accounts payable		$	360					$	480
Payables for administrative and other expenses			360						520
Income taxes payable			290						270
Note payable (due 12/31/2019)			1,300						950
Common stock			1,020						920
Retained earnings			1,160						610
Total liabilities and shareholders' equity		$	4,490					$	3,750

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

Solution :

Tiger Enterprises
Statement of Cash Flows (Indirect Method)
For year ended December 31, 2018
Particulars	Details	Amount
Cash Flow from Operating Activities:
Net Income	$2,604.00
Adjustments to reconcile net income to net cash provided by operations:
Depreciation Expense	$360.00
Decrease in accounts receivables ($950 - $810)	$140.00
Increase in inventory ($750 - $720)	-$30.00
Increase in prepaid insurance ($170 - $80)	-$90.00
Decrease in accounts payable ($480 - $360)	-$120.00
Decrease in payable for administrative and other expenses ($520 - $360)	-$160.00
Increase in income tax payable ($290 - $270)	$20.00
Net Cash provided by operating activities		$2,724.00
Cash Flow from Investing Activities:
Purchase of Equipment ($3,300 - $2,400)	-$900.00
Net Cash Provided by Investing activities		-$900.00
Cash Flow from Financing Activities:
Proceed from issue of note ($1,300 - $950)	$350.00
Proceed from issue of common stock ($1,020 - $920)	$100.00
Dividend Paid ($610 + $2,604 - $1,160)	-$2,054.00
Net Cash Provided by financing activities		-$1,604.00
Net Increase / (Decrease) in Cash		$220.00
Cash balance at beginning of year		$320.00
Cash balance at end of year		$540.00