Answer and Explanation:
The presentation of the cash flow statement is presented below:
Particulars (in million)
Cash flow from operating activities
Net income $70
Adjustments made:
Add: Depreciation expenses [$122 - $98] $24
Add: Bad debt expense [$19 -$4] $15
Add: patent amortization expense [$22 - $20] $2
Add: decrease in Accounts receivable $12
Less: increase in Prepaid expenses ($3)
Less: increase in Inventory ($17)
Less: decrease in Accounts payable ($18)
Less: decrease in Accrued liabilities ($12)
Net cash flow from operating activities $73
Cash flow from Investing activities
purchase of long term investment ($34)
purchase of Buildings and equipment ($7)
Net cash flow used by Investing activities ($41)
Cash flow from Financing activities
Payment of cash dividend ($86)
Issuance of Notes payable 38
Proceed from Common stock [$14 + $54] $68
Payment of Bonds payable ($58)
Net Cash flow used by Financing activities ($38)
Decrease in cash ($6)
Add: cash in beginning,2017 $32
cash at end ,2018 $26
Non cash investing and financing activities:
Acquired Building with a seven-year lease agreement $107
Working notes:
Retained earnings Account
To cash dividend (B/F) 86 By Balance b/d 158
To Balance c/d 142 By Net income 70
228 228
Buildings and equipment Accounts
To Balance b/d 245
To lease liability 107
To cash (B/f) 7 To Balance c/d 359
359 359
