Chapter 10
The Statement of Cash Flow
531
AP-16B (
1
2
)
Carlin Corporation has prepared the following cash flow statement for the year-end.
Carlin Corporation
Cash Flow Statement
For the Year Ended December 31, 2016
Cash Flow from Operating Activities
Net Income
$56,200
Add: Depreciation Expense
3,100
Changes in Assets and Liabilities
Increase in Accounts Receivable
(31,000)
Increase in Inventory
(33,000)
Decrease in Accounts Payable
(26,000)
Change in Cash due to Operating Activities
($30,700)
Cash Flow from Investing Activities
Purchase of Equipment
(95,000)
Sale of Land
120,000
Change in Cash due to Investing Activities
25,000
Cash Flow from Financing Activities
Proceeds from Issuance of Common Shares
10,000
Received Bank Loan
45,000
Dividends Paid
(40,000)
Change in Cash due to Financing Activities
15,000
Total Change in Cash
9,300
Opening Cash Balance
12,000
Cash at the End of the Year
$21,300
Required
a) The company had a net income during the year; however, they had a negative cash flow
from operations. Identify the problems that led to a negative cash flow from operations.
