STATEMENT OF CASH FLOWS $($DIRECT METHOD$)$ STATEMENT OF CASH FLOWS $($DIRECT METHOD$)$

The Group, Inc.

Consolidated Balance Sheets

$($in thousands$)$

Section

Dec. $31,$ Dec. $31,$ Change

Year $2$ Year $1$

ASSETS

Current assets:

Cash and cash equivalents

Accounts receivables, net

Inventories

Prepaid expenses

Total current assets

Equipment

Less: Accumulated depreciation

Total assets

LIABILITIES AND STOCKHOLDERS' EQUTTY

Current liabilities:

$O,$ Accounts payable

$O,$ Accrued liabilities

Total current liabilities

$F,$ Long$-$term debt

Stockholders' equity:

$F,$ Contributed capital

$O_{,}{F}_{,}$ Retained earnings

Total stockholders' equity

Total Liabilities and Stockholders' Equity

Consolidated Statement of Income

$($in thousands$)$

Net sales

Cost of sales

Gross profit

Operating expenses:

Selling, general & administrative expenses

Depreciation expense

Total operating expenses

Operating income

Interest income

Income before income taxes

Income tax expense

Net income HANDOUT $12-3,$ continued

The Group, Inc. did not sell any equipment or repay any borrowings during the year ended December $31,$

Year $2.$ The company declared and paid dividends in the amount of $$3,564$ during the year ended

December $31,$ Year $2.$

Using the information provided above, compute the net cash flow provided by $($used in$)$ operating

activities using the direct method.

Then, compute the net cash flow for each category by completing the following table:

Year $2$

Net cash flow provided by $($used in$)$ operating activities

Net cash flow provided by $($used in$)$ investing activities

Net cash flow provided by $($used in$)$ financing activities

Net increase $($decrease$)$ in cash

Cash and cash equivalents, beginning of the quarter

Cash and cash equivalents, end of the quarter

The Group, Inc.

Consolidated Balance Sheets

$($in thousands$)$

Section Dec. $31,$ Year $2$ Dec. $31,$ Year $1$ Change

ASSETS

Current assets:

Cash and cash equivalents $$92,069$ $$72,634+$ $$19,435$

O Accounts receivables, net $55,94775,49219,545$

O Inventories $50,78453,1292,345$

O Prepaid expenses $12,11213,057945$

Total current assets $210,912214,312$

I Equipment $145,444134,312+11,132$

O Less: Accumulated depreciation $(50,515)(36,689)13,826$

Total assets $$305,841$ $$311,935$

LIABILITIES AND STOCKHOLDERS$$ EQUITY

Current liabilities:

O Accounts payable $$25,466$ $$34,879$ $$9,413$

O Accrued liabilities $40,57440,722148$

Total current liabilities $66,04075,601$

F Long$-$term debt $10,42210,206216$

Stockholders$$ equity:

F Contributed capital $1,6621,284+378$

O$,$F Retained earnings $227,717224,844+2,873$

Total stockholders$$ equity $229,379226,128$

Total Liabilities and Stockholders$$ Equity $$305,841$ $$311,935$

Consolidated Statement of Income

$($in thousands$)$

Year $2$

Net sales $$130,896$

Cost of sales $74,040$

Gross profit $56,856$

Operating expenses:

Selling, general & administrative expenses $33,211$

Depreciation expense $13,826$

Total operating expenses $47,037$

Operating income $9,819$

Interest income $239$

Income before income taxes $10,058$

Income tax expense $3,621$

Net income $ $6,437$

HANDOUT $123,$ continued

The Group, Inc. did not sell any equipment or repay any borrowings during the year ended December $31,$ Year $2.$ The company declared and paid dividends in the amount of $$3,564$ during the year ended December $31,$ Year $2.$

Using the information provided above, compute the net cash flow provided by $($used in$)$ operating activities using the direct method.

Then, compute the net cash flow for each category by completing the following table:

Year $2$

Net cash flow provided by $($used in$)$ operating activities

Net cash flow provided by $($used in$)$ investing activities

Net cash flow provided by $($used in$)$ financing activities

Net increase $($decrease$)$ in cash $19,435$

Cash and cash equivalents, beginning of the quarter $72,634$

Cash and cash equivalents, end of the quarter $$92,069$