TIGER ENTERPRISES
Income Statement
For the Year Ended December 31, 2018
($ in thousands)
Sales revenue $8,500
Operating expenses:
Cost of goods sold $3,700
Depreciation 270
Insurance 250
Administrative and other 2,100
Total operating expenses 6,320
Income before income taxes 2,180
Income tax expense 872
Net income $1,308

Balance Sheet Information ($ in thousands) Dec. 31,2018 Dec. 31, 2017
Assets:
Cash $360 $230
Accounts receivable 765 860
Inventory 685 630
Prepaid insurance 80 35
Plant and equipment 2,400 1,950
Less: Accumulated depreciation (900) (630)
Total assets $3,390 $3,075
Liabilities and Shareholders' Equity:
Accounts payable $315 $390
Payables for administrative and other expenses 315 430
Income taxes payable 215 180
Note payable (due 12/31/2019) 980 750
Common stock 960 830
Retained earnings 605 495
Total liabilities and shareholders' equity $3,390 $ 3,075

Required:
Prepare Tiger’s statement of cash flows, using the indirect method to present cash flows from operating activities. (Hint: You will have to calculate dividend payments). (Enter your answers in thousands. Amounts to be deducted should be indicated with a minus sign.)

                          Tiger Enterprises

                    Statement of Cash Flows

             For Year ended December 31, 2018

Cash flow from operating activities

Net income                                                                 $1,308

Adjustment to reconcile net income                           $110

+ depreciation $270

+ decrease in accounts receivable $95

+ increase in income tax payable $35

- increase in inventory ($55)

- increase in prepaid insurance ($45)

- decrease in accounts payable ($75)

- decrease in other expenses payable ($115)                        

Net cash flow from operating activities                    $1,418

Cash flow form investing activities

Acquisition of P, P & E                                                ($450)  

Net cash flow from investing activities                      ($450)

Cash flow from financial activities

Proceeds from notes payable                                     $230

Proceeds from issuance of common stock                $130

Payment of dividends                                               ($1,198)  

Net cash flow from financing activities                     ($838)

Total cash flow increase                                              $130

Cash balance December 31, 2017                              $230  

Cash balance December 31, 2018                              $360

Explanation:

cash $360 - $230 (+$130 change)

net income $1,308

depreciation $270

accounts receivable -$95 change

inventory + $55 change

Prepaid insurance + $45 change

P, P & E +$450 change

Accounts payable - $75 change

Other expenses payables -$115 change

income tax payable +$35 change

notes payable +$230 change

common stock +$130 change

retained earnings +$110 change

dividends paid = net income - change in retained earnings = $1,308 - $110 = $1,198

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