Question

No. 2:

Abbey INC.
Balance Sheet
Assets	Dec. 31, 2010	Jan. 1, 2010	Inc./Dec.
Equipment	$39,000	$22,000	$17,000 Inc.
Less: Accumulated depreciation	-17,000	$(11,000)	6,000 Inc.
Accounts receivable	91000	88,000	3,000 Inc.
Cash	45,000	13,000	32,000 Inc.
Total	$158,000	$112,000
Equity and Liabilities
Share capital—ordinary	100000	$80,000	20,000 Inc.
Retained earnings	38,000	17,000	21,000 Inc.
Accounts payable	20,000	15,000	5,000 Inc.
Total	$158,000	$112,000

Net Income of $34000 was reported and Dividend of $13000 were paid in 2010. New Equipment was purchased and none was sold.

Requirement:

Prepare Statement of Cash Flow for the year 2010.

Answer 1

Sol:

Abbey INC cash flow statement for the year ended Dec 31 2010

	Particulars	Working	Amount
	Cash flow (operating activities)
	Net Income		$34,000
Add cash	Depreciation	$6,000
	Increase in accounts payable	$5,000	$11,000
Less cash	Increase in accounts receivable		($3,000)
	Net cash (operations)		$42,000
	Cash flow (Investing activities)
Less	Purchase of equipment		($17,000)
	Cash Flow (Finance activities)
	Shares issue	$20,000
Less	Dividend payable	($13,000)	$7,000
	Net increase or decrease in cash or cash equivalent		$32,000
Add	Opening Cash balance		$13,000
	Closing Cash balance		$45,000