FIANACIAL ACCOUNTING

Exercise1:

Sohar Company had net income of OMR 184,000 in 2017. Depreciation expense for the year is OMR 55,000. During the year, Accounts Receivable increased OMR 7,000 and Prepaid Expenses decreased OMR 1,000. The company also sold equipment at a loss of OMR 2,000.

Instructions

Calculate net cash flows from operating activities using the indirect method.

Exercise2:

Muscat Company issued ordinary shares for proceeds of OMR 24,000 during 2017. The company paid dividends of OMR 2,000. The company also issued a non-current note payable for OMR 30,000 in exchange for equipment during the year. The company sold treasury shares that had a cost of OMR 2,000 for OMR 4,000.

Instructions

Compute net cash flows from financing activities.

Exercise3:

AL-Taif Company prepared the tabulation below at December 31, 2017.

Net Income............................................................................................ OMR 255,000

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation expense, OMR 25,000................................................. _____

Decrease in accounts receivable, OMR 40,000................................. _____

Increase in inventory, OMR 12,000.................................................. _____

Decrease in accounts payable, OMR 8,600...................................... _____

Increase in income taxes payable, OMR 1,500................................. _____

Loss on disposal of land, OMR 5,000............................................... _____

Net cash provided by operating activities.......................................... _____

Instructions

Show how each item should be reported in the statement of cash flows. Use parentheses for deductions.

Exercise4:

A comparative statement of financial position for Shinas Company appears below:

SHINAS COMPANY

Comparative Statement of Financial Position

Dec. 31, 2017 Dec. 31, 2016

Assets

Equipment OMR 60,000 OMR 32,000

Accumulated depreciationequipment (20,000) (14,000)

Long-term investments -0- 18,000

Prepaid expenses 6,000 9,000

Inventory 25,000 18,000

Accounts receivable 18,000 14,000

Cash 33,000 10,000

Total assets OMR 122,000 OMR 87,000

Equity and Liabilities

Share capital-ordinary OMR 40,000 OMR 23,000

Retained earnings 28,000 10,000

Bonds payable 37,000 47,000

Accounts payable 17,000 7,000

Total equity and liabilities OMR 122,000 OMR 87,000

Additional information:

1. Net income for the year ending December 31, 2017 was OMR 33,000.

2. Cash dividends of OMR 15,000 were declared and paid during the year.

3. Long-term investments that had a cost of OMR 18,000 were sold for OMR 14,000.

4. Sales for 2017 were OMR 120,000.

Instructions

Prepare a statement of cash flows for the year ended December 31, 2017, using the indirect method.