Putting all of the pieces of the statement of cash flows together produces the following statement for Lucky 7:
| Cash flows from operating activities: |
-
|
-
|
| Net income |
-
| $49,000 |
| Adjustments to reconcile net income: |
-
|
-
|
|
Depreciation expense
| $20,000 |
-
|
|
Loss on sale of plant assets
| $5,000 |
-
|
|
Gain on sale of investments
| ($7,000) |
-
|
|
Add decrease in accounts receivable
| $2,000 |
-
|
|
Deduct increase in inventory
| ($17,000) |
-
|
|
Add decrease in prepaid expenses
| $2,000 |
-
|
|
Add increase in accounts payable
| $4,500 |
-
|
|
Deduct decrease in accrued liabilities
| ($200) |
-
|
|
Deduct increase in income taxes payable
| ($1,000) | $8,300 |
| Net cash flows from operating activities |
-
| $57,300 |
|
-
|
-
|
-
|
| Cash flows from investing activities: |
-
|
-
|
|
Cash payment for long-term investments
| ($100,000) |
-
|
|
Cash receipt from sale of long-term investments
| $90,000 |
-
|
|
Cash payment for purchase of plant assets
| ($200,000) |
-
|
|
Cash receipt from sale of plant assets
| $40,000 |
-
|
| Net cash flows from investing activities |
-
| ($170,000) |
|
-
|
-
|
-
|
| Cash flows from financing activities: |
-
|
-
|
|
Cash payment of notes payable
| ($75,000) |
-
|
|
Cash receipt from issuance of notes payable
| $125,000 |
-
|
|
Cash receipt from issuance of common stock
| $99,700 |
-
|
|
Cash payment of dividends
| ($4,000) |
-
|
|
Cash payment for purchase of treasury stock
| ($12,500) |
-
|
| Net cash flows from financing activities |
-
| $133,200 |
| Net increase in cash |
-
| $20,500 |
|
-
|
-
|
-
|
| Cash at the beginning of the year |
-
| $14,500 |
| Cash at the end of the year |
-
| $35,000 |
| Increase in cash |
-
| $20,500 |
|
-
|
-
|
-
|
| Schedule of non-cash investing and financing transactions |
-
|
-
|
| Issued notes payable in exchange for plant assets. |
-
| $50,000 |
The total for the statement of cash flows, an increase of $20,500, equals the difference between the cash balance at the end of the year and the cash balance at the beginning of the year.