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3 years ago

A comparative balance sheet and an income statement for Burgess Company are given below:

Business

2 answers:

Anarel [89]3 years ago

3 0

Answer:

Burgess Company statement of cashflows shows a Net decrease in Cash & Cash Equivalents of $30 Million and Closing Cash & Cash Equivalents of $49 Million. Complete solution using indirect method is presented below and also attached in Excel format.

*Please note that all figures are 'dollars in millions' and figures in brackets represent negative figures

Explanation:

Burgess Company

Statement of Cash flows

Net Profit before tax $178

Adjustment of Non Cash Expenses:

Depreciation (Working 1) $132

Gain on Sale of Equipment $(3)

Increase in Accrued Liabilities $25

Working Capital Changes:

Increase in Inventory $(45)

Increase in Accounts Receivables $(65)

Increase in Accounts Payables $95

Cash generated from Operations $317

Tax Paid (Working 2) $(57)

Net cash from operating activities $260

Cash flows from Investing Activities

Purchase of Property, Plant & Equipment Working 3) $(62)

Proceeds from Sale of Equipment $8

Net cash from investing activities $(54)

Cash flow from Financing Activities

Repayment of Bonds Payable $(170)

Dividends paid (Working 4) $(66)

Net cash from Financing Activities $(236)

Net decrease in cash and cash equivalents $(30)

Opening cash and cash equivalents $79

Closing cash and cash equivalents $49

Workings

Working 1

Opening Accumulated Depreciation $641

Add: Depreciation Charge for the year (Balancing Figure) $132

Less: Depreciation of Equipment Sold $(8)

Closing Accumulated Depreciation $765

Working 2

Opening Tax Payables $70

Add: Tax Payable charged to Income Statement $63

Less: Cash Payment (Balancing Figure) $(57)

Closing Tax Payable $76

Working 3

Opening Property, Plant & Equipment $1,466

Add: Purchases during the year (Balancing Figure) $62

Less: Sold during the year $(13)

Closing Property, Plant & Equipment $1,515

Working 4

Opening Retained Earnings $928

Add: Net Income for the Year $115

Less: Dividends Paid During the year (Balancing Figure) $(66)

Closing Retained Earnings $977

Download xlsx

Ghella [55]3 years ago

3 0

Answer: The net increase in cash $ Cash equivalents is $13million

Explanation:

Cash flow statement for the year ended.

Operating Activities

Net income. 115,000

Depreciation 765,000

Account Receivable 645,000

-----------------

Total cash generated. 1,525,000

Cash from investing Activities

Property, plant &Equipment (1,515,000)

Proceed on sale of equipment 3

Net cash used in investing Activities. (1,512,000)

-----------------

Net increase in cash & cash equivalent. 13,000,000

Cash & cash equivalent at beginning of period. 49,000,000

Cash & cash equivalent at end of period. 79,000,000

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2 years ago

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