A TEMPLATE FOR DOING CASH FLOWS

INDIRECT METHOD

IMPERIAL COMPANY
1992 1991
Cash & equivalents 900 3,000 (2,100)
Accounts receivable (net) 5,600 4,000 1,600
Inventory 8,000 10,000 (2,000)
Prepaid Insurance 600 500 100
Prepaid Wages 1,000 600 400 One of the following is usually a plug:
Other Current Assets 400 900 (500) Acquisitions Disposals Depreciation Check
Long-term Investments 1,800 4,600 (2,800) 200 3,000 (2,800)
Net plant & equipment 70,000 53,000 17,000 22,000 1,000 4,000 17,000
Deferred tax asset 200 400 (200)
Intangible assets 2,000 3,000 (1,000) 5,000 4,000 2000 (1,000)
TOTAL 90,500 80,000 10,500

Accounts Payable 5,000 8,000 (3,000)

Wages Payable 1,000 0 1,000
Note Payable 1,500 1,300 200
Interest Payable 500 700 (200)
Current Tax Payable 1,000 1,200 (200)
Deferred Tax Payable 2,000 800 1,200 Issue Repurchase Check
Bonds Payable 19,000 6,000 13,000 23,000 10,000 13,000
Unrealized Gains 600 900 (300)
Common Stock 19,400 24,100 (4,700) 1,200 5,900 (4,700)
Retained Earnings 40,500 37,000 3,500
TOTAL 90,500 80,000 10,500
CHECK ASSETS = EQUITIES 0 0 0
Revenue $70,000
Cost of goods sold (37,500)
Selling expenses (4,300)
Wages expense (5,000)
Administrative expenses (5,800)
Insurance expense (1,500)
Depreciation (4,000)
Amortization of goodwill (2,000)
Interest expense (1,200)
Gain/(loss) on sale of asset 300
Income tax (2,500)
Net Income 6,500
Cash Dividend 1,800
Stock Dividend 1,200
Change in retained earnings 3,500
CHECK EQUAL TO CHANGE IN BALANCE SHEET 0
CASH FLOW STATEMENTS
INDIRECT DIRECT

CASH FROM OPERATIONS CASH FROM OPERATIONS

Net Income $6,500 Receipts from customers 68,400
Depreciation & amortization 6,000 Payments to suppliers for inventory (38,500)
Change in accounts receivable (1,600) Expenditures:
Change in inventory 2,000 Selling (3,800)
Change in prepaid insurance (100) Wages (4,400)
Change in prepaid wages (400) Administration (5,800)
Change in other current assets 500 Insurance (1,600)
Change in accounts payable (3,000) Interest (1,400)
Change in wages payable 1,000 Income tax (1,300)
Change in interest payable (200)
Gain on disposal of asset (300)
Change in taxes payable (200)
Change in deferred tax asset 200
Change in deferred tax payable 1,200
Cash from operations $ 11,600 Cash from operations $ 11,600

CASH FOR INVESTMENTS

Acquisitions of PPE (22,000)
Disposals of PPE 1,300
Acquisitions of intangibles (5,000)
Disposals of intangibles 4,000
Acquisitions of long-term investments (200)
Change in unrealized gains on long-term investments (300)
Disposal of long-term investments 3,000
Cash for investments ($19,200)
CASH FROM FINANCING
Issue of bonds 23,000
Repurchase of bonds (10,000)
Increase in notes payable 200
Issue of common stock 1,200
Stock dividend (1,200)
Repurchase of common stock (5,900)
Cash dividend (1,800)
Cash from financing $5,500

Change in cash balance $ (2,100)

This is another example for you to try with the template
UNIVERSAL COMPANY
1995 1994
Cash $11,000 $3,000 $8,000
Marketable securities 5,000 7,000 (2,000)
Accounts Receivable 72,000 81,000 (9,000)
Inventory 103,000 93,000 10,000
Prepaid Expenses 2,000 6,000 (4,000)
Long-term Investments 79,000 85,000 (6,000)
Net plant & equipment 230,000 115,000 115,000
TOTAL $502,000 $390,000 $112,000

Accounts Payable $105,000 $90,000 $15,000

Accrued Liabilities 6,000 12,000 (6,000)
Deferred income taxes 15,000 10,000 5,000
Notes payable 78,000 28,000 50,000
Common Stock 175,000 140,000 35,000
Retained Earnings 123,000 110,000 13,000
TOTAL $502,000 $390,000 $112,000
CHECK 0 0 0

Net income $63,000

Cash dividends (40,000)
Stock dividends (10,000)
Change in retained earnings $13,000
Check 0

Acquisitions $
Disposals (at net book value) (73,000)
Depreciation (17,000)
Change in net plant & equipment $115,000