Hi- I saw that someone asked about this question last November but didn't include enough info. I am missing something, and am unsure why, but my cash flow statement is out by $650, and I feel so boggled by it. I have probably missed something simple or else I have completely messed it all up.

Sorry about the formatting of the pasted cash flow statement.

Here is the balance sheet I have been given:

Assets:
Cash: 2008... 92,700 2007... 47250
Accounts Receivable: 2008... 80,800 2007... 21,000
Inventory: 2008... 121,900 2007... 102,650
Prepaid expenses: 2008... 10,000 2007... 16,000
Available for sale securities: 2008... 84,500 2007... 107,000
Property, plant and equipment : 2008... 290,000 2007... 205,000
Accumulated amortization: 2008... (49,500) 2007... (40,000)

Liabilities:
Accounts Payable: 2008... 52,700 2007... 48,280
Accrued Expenses Payable: 2008... 12,100 2007... 18,830
Notes Payable: 2008... 140,000 2007... 70,000
Common Shares: 2008... 250,000 2007... 200,000
Retained Earnings: 2008... 175,600 2007... 121,790

Income Statement 2008:

Revenues:
Sales 297,500
Gain on sale of equipment: 8,750
= 306,250

Expenses:
Cost of goods sold 99,460
Operating expenses 14,670
Amortization expense 58,700
Interest expense 2,940
Loss on sale of available-for-sale securities 7,500

Income before tax: 122,980
less income tax: 32,670

Net income: 90,310
other stuff:

- available for sale securities were sold for $15,000m resulting in a relaized loss of $7500. There were no unrealized gains or losses in 2008.
-new equipment costing $141,000 was purchased for $71,000 cash and $70,000 note payable
- equipment with an original cost of $56,000 was sold for $15,500, resulting in a gain of $8,750

I am preparing an indirect cash flow statement, and then doing the operating activities section again using the direct method.

This is what I got:

Operating activities
Net income $90,310
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization expense $58,700
Gain on sale of equipment -8,750
Loss on sale of available-for-sale securities 7,500
Increase in accounts receivable -45,450
Increase in inventories -19,250
Decrease in prepaid expenses 6,000
Increase in accounts payable 4,420
Decrease in accrued expenses payable -6,730 -3,560
Net cash provided by operating activities 86,750
Investing activities
Sale of equipment $15,550
Purchase of equipment (see note X) -71,000
Net cash provided by investing activities -55,450
Financing activities
Issue of common shares 50,000
Payment of dividends* -36,500
Net cash used by financing activities 13,500
Net increase in cash and equivalents 44,800
Cash and cash equivalents, January 1 47,250
Cash and cash equivalents, December 31 i get 92050 so far 92,700

Note X: During the year, equipment was purchased with a cost of $141,000. $71,000 was paid cash and the balance in a note payable of $70,000.



*Cash paid for dividends:
Retained earnings, beginning $121,790
Add: Net income 90,310
212,100
Less: Cash dividends -36,500
Retained earnings, ending $175,600

That last line in the cash flow statement is:

Cash and Cash Equivalents, Dec 31... 92,050 but the answer should be 92,700 I believe.