SOLUTION TO TRUE TREAD COMPANY

Cash-flow Statement (Indirect Method) for Period ended 31 December, 2020

Cash-flows from operating Activities: $ $
Net Income 46,100
Add: Depreciation (52,800 – 45,100) 7,700
Increase in Accounts Payable 4,100
Increase in Accrued expenses 900
Loss on Sale of Investment 4,000** 16,700
62,800
Deduct: Increase in Accounts Receivable 3,800
Increase in Inventories 13,100 16,900
Net Cash-flows from operating Activities 45,900

Cash-flows from investing activities:

Cash received from sale of investments 41,000
Less: Cash paid for acquisition of land
and equipment (105,500 + 25,200) 130,700
Net Cash-flows from investing activities (89,700)

Cash-flows from financing activities:

Cash received from issue of common stock 105,000
Less: cash paid for dividends 46,000
Net Cash-flows from financing activities 59,000
Increase in cash 5,200
Cash at the beginning of the year 53,700
Cash at the end of the year 68, 900

** Added back to net profit as it had reduced the net profit