Help creating and anaylyzing a Statement of Cash Flow
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You are given the following information for the ABC Corporation:
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ABC Corporation
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Balance Sheet (Partial)
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Year 3
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Year 4
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| Cash |
$70,000
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$9,640
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| AR |
70,000
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85,000
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| Inventories |
87,000
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84,000
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| Accounts Payable |
48,000
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51,000
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ABC Corporation
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Income Statement
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For the Year Ending December 31, Year 4
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| Sales |
$560,000
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| Operating Expenses |
$420,000
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| Depreciation Expense |
46,000
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466,000
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| Income Before Taxes |
$94,000
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| Income Tax Expense |
$37,600
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| Net Income |
$56,400
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Other Data:
- The ABC corporation sold an asset and recorded a loss on the sale of $8.700. The sale price was $220,000 and the asset was originally purchased for $360,000.
- Dividends paid in Year 4 were $22, 460.
Required:
- Prepare a statement of cash flows for the year ending December 31, Year 4 using the indirect method.
- What conclusions could you arrive at regarding the cash position of the firm?
- What information was provided in the statement of cash flows that was not evident if just the balance sheet and the income statement were examined?
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