Statement of Cash Flow
 Solution to Exercise 1
REYNOLDS COMPANY
Statement of Cash Flows (Direct Method)
For the year ended December 31, 1997
Tk.
Cash flows from operating Activities
Cash Received from Customers (W-1)
Cash Payment to Suppliers (W-2)
Cash Payment for Operating expenses (W-3)
Cash Payment for Interest Expenses
Cash Payment for Income Tax
Net Cash Provided by Operating Activities
Cash flows from Investing Activities
Sale of Land
Sale of Equipment
Purchase of Equipment
Net Cash Provided by Investing Activities
Cash flows from Financing Activities
Sale of Common Stock
Redemption of Bonds
Payment of Cash Dividends
Net Cash Provided by Financing Activities
Net Change in Cash Balance
Cash at the Beginning of Period
Cash at the End of Period
Workings
1. Cash Received from Customers
Sales Revenue
(-)Increase in A/R
2.
Cash Paid to Suppliers
Cost of Goods Sold
(+) Increase in Inventory
(+) Decrease in A/P
3.
Cash Paid for Operating Expenses
Operating Expense
(-) Depreciation
(-) Loss of Sale of Equipment
(-) Increase Accrued Expenses
536,000
176,000
12,000
65,000
Tk.
848,000
789,000
59,000
25,000
34,000
(166,0000)
(107,000)
130,000
(10,000)
(55,000)
65,000
17,000
37,000
54,000
Tk. 890,000
42,000
Tk. 848,000
Tk. 465,000
54,000
Tk. 519,000
17,000
Tk. 536,000
Tk. 221,000
(33,000)
(2,000)
(10,000)
Tk. 176,000
(Indirect Method)
Tk.
Cash flows from operating Activities
Net Income
Add: Depreciation
Loss on Sale of Equipment
Decrease Prepaid Expenses
Increase Accrued Expense
Less: Increase A/R
Increase Inventories
Decrease A/P
Net Cash provided from Operating Activities
33,000
2,000
2,000
10,000
(42,000)
(54,000)
(17,000)
Tk.
125,000
47,000
(113,000)
59,000
Page 1 of 15
Solution to Exercise 2
PATRICK SWAYZE COMPANY
Statement of Cash Flows
For the year ended December 31, 2005
Tk.
Cash flows from Operating Activities
Net Income
Add: Depreciation
Decrease Inventories
Increase A/P
Less: Increase A/R
Decrease Income Tax Payable
Net Cash Provided be Operating Activities
Cash flows from Investing Activities
Sale of Equipment
Purchase of Equipment
Net Cash Provided by Investing Activities
Cash flows from Financing Activities
Sale of Common Stock
Redemption of Bonds
Payment of Cash Dividends
Net Cash Provided by Investing Activities
Net Change in Cash Balance
Cash at the Beginning of Period
Cash at the End of Period
Workings
1. Calculation of Depreciation
Cost Price of Sold Equipment
(-) Book Value of Sold Equipment
Accumulated Depreciation
Accumulated Depreciation at the End
Total Accumulated Depreciation
Accumulated Depreciation at the Beginning
Depreciation Exp. for this year
2. Calculation New Equipment Purchase
Property, Plants and Equipment at the end
(+) Equipment Sold
(-)Property, Plants and Equipment at the beginning
3. Calculation of Dividend paid in Cash
Retained Earning at the Beginning
(+) Net Income for the current year
Total Retained Earning
(-)Retained Earning at the End
Dividend Paid in Cash
5,500
10,000
6,000
(14,000)
(3,000)
Tk.
10,000
21,500
(17,000)
14,500
8,500
(10,000)
(1,500)
4,000
(6,000)
(5,000)
(7,000)
6,000
13,000
19,000
Tk. 18,000
8,500
Tk. 9,500
20,000
Tk. 29,500
Tk. 24,000
Tk. 5,500
Tk. 70,000
18,000
Tk. 88,000
78,000
Tk. 10,000
Tk. 38,000
10,000
Tk. 48,000
43,000
Tk. 5,000
Page 2 of 15
 Solution to Exercise 3
FERN GALENTI, INC
Statement of Cash Flows
For the year ended December 31, 2002
Tk.
Cash flows from Operating Activities
Net Income
Add: Depreciation
Loss on Sale of Plant assets
Increase A/P
Less: Increase A/R
Increase Inventory
Increase Prepaid Expenses
Decrease Accrued Expenses Payable
Net Cash Provided be Operating Activities
Cash flows from Investing Activities
Purchase Plant Assets
Sale of Equipment
New Investment
Net Cash Provided by Investing Activities
Cash flows from Financing Activities
Sale of Common Stock
Redemption of Bonds
Payment of Cash Dividends
Net Cash Provided by Investing Activities
Net Change in Cash Balance
Cash at the Beginning of Period
Cash at the End of Period
46,500
7,500
24,700
(57,800)
(9,650)
(2,400)
(500)
Tk.
150,900
78,700
(70,350)
159,250
(85,000)
1,500
(14,000)
(97,500)
45,000
(25,000)
(22,350)
(2,350)
59,400
38,400
97,800
Workings
1. Calculation of Depreciation
Cost Price of Sold Equipment
(-) Book Value of Sold Equipment
Accumulated Depreciation
Accumulated Depreciation at the End
Total Accumulated Depreciation
Accumulated Depreciation at the Beginning
Depreciation Exp. for this year
Tk. 57,500
9,000
Tk. 48,500
50,000
Tk. 98,500
Tk. 52,000
Tk. 46,500
2. Calculation of Dividend paid in Cash
Retained Earning at the Beginning
(+) Net Income for the current year
Total Retained Earning
(-)Retained Earning at the End
Dividend Paid in Cash
Tk. 105,450
150,900
Tk. 256,350
234,000
Tk. 22,350
Page 3 of 15
 Solution to Exercise 4
SEAN SEYMOR COMPANY
Statement of Cash Flows
For the year ended December 31, 2001
Tk.
Cash flows from Operating Activities
Net Income
Add: Depreciation
Less: Increase A/R
Increase Inventories
Decrease A/P
Decrease Tax Payable
Net Cash Provided be Operating Activities
Cash flows from Investing Activities
Sale of Equipment
(-) Purchase of Equipment
Net Cash Provided by Investing Activities
Cash flows from Financing Activities
Issuance of Bonds
Payment of Cash Dividends
Net Cash Provided by Investing Activities
Net Change in Cash Balance
Cash at the Beginning of Period
Cash at the End of Period
Workings
1. Calculation of Depreciation
Cost Price of Sold Equipment
(-) Book Value of Sold Equipment
Accumulated Depreciation
Accumulated Depreciation at the End
Total Accumulated Depreciation
Accumulated Depreciation at the Beginning
Depreciation Exp. for this year
2. Calculation New Equipment Purchase
Property, Plants and Equipment at the end
(+) Equipment Sold
(-)Property, Plants and Equipment at the beginning
3. Calculation of Dividend paid in Cash
Retained Earning at the Beginning
(+) Net Income for the current year
Total Retained Earning
(-)Retained Earning at the End
Dividend Paid in Cash
11,000
(4,000)
(3,000)
(4,000)
(5,000)
Tk.
17,000
(5000)
12,000
10,000
(7,000)
3,000
10,000
(12,000)
(2,000)
13,000
13,000
26,000
Tk. 15,000
10,000
Tk. 5,000
30,000
Tk. 35,000
Tk. 24,000
Tk. 11,000
Tk. 70,000
15,000
Tk. 85,000
78,000
Tk. 7,000
Tk. 28,000
17,000
Tk. 45,000
33,000
Tk. 12,000
Page 4 of 15
 Solution to Exercise 5
CORTINA COMPANY
Statement of Cash Flows
For the year ended December 31, 2004
Tk.
Cash flows from Operating Activities
Net Income
(+) Depreciation
(-) Gain on Sale of Equipment (14,000 –13,000)
(-) Increase A/R
(+) Decrease Inventory
(+) Decrease Prepaid Expense
(-) Decrease A/P
Net Cash Provided be Operating Activities
Cash flows from Investing Activities
(+) Sale of Land
(+) Sale of Equipmemt
(-) Purchase of Equipment
Net Cash Provided by Investing Activities
Cash flows from Financing Activities
(-) Payment of Cash Dividends
Net Cash Provided by Investing Activities
Net Change in Cash Balance
Cash at the Beginning of Period
Cash at the End of Period
70,000
(1,000)
(13,000)
8,000
4,400
12,000
Tk.
26,890
56,400
83,290
25,000
14,000
(65,000)
(26,000)
(74,290)
(74,290)
(17,000)
57,000
40,000
Workings
1. Calculation of Depreciation
Cost Price of Sold Equipment
Tk. 40,000
(-) Book Value of Sold Equipment
13,000
Accumulated Depreciation
Tk. 27,000
Accumulated Depreciation at the End (75,000+60,000)
135,000
Total Accumulated Depreciation
Tk. 162,000
Accu. Depreciation at the Beginning (50000+42000)
Tk. 92,000
Depreciation Exp. for this year
Tk. 70,000
2. Calculation of Dividend paid in Cash
Retained Earning at the Beginning
(+) Net Income for the current year
Total Retained Earning
(-)Retained Earning at the End
Dividend Paid in Cash
Tk. 200,540
26890
Tk. 227,430
153,140
Tk. 74,290
Page 5 of 15