LAG Network Inc.?s balance sheet and income statement are as follows:

Net cash inflow from operating activities = $67,200

Additional information regarding LAG Network Inc.?s activities during 2017:

a. Equipment is purchased for $16,800 cash.

b. 11,200 common shares are issued for cash at $2.50 per share.

c. Declared and paid $51,800 of cash dividends during the year.

Required

Prepare a statement of cash flows for 2017 that reports the cash inflows and outflows from operating activities according to the indirect method. Show your supporting calculations.

Analysis Component:

Assume that LAG Network Inc. had a loss instead of a profit. Does a loss mean that there will always be a cash outflow from operating activities on the statement of cash flows.

Transcribed Image Text:

LAG Network Inc. Income Statement For Year Ended December 31, 2017 Sales Cost of goods sold Gross profit Operating expenses: Depreciation expense............. $ 25,200 233,800 Other expenses Total operating expenses Profit from operations Income taxes Profit ******** $929,600 557,200 $372,400 259,000 $113,400 19,600 $ 93,800 LAG Network Inc. Comparative Balance Sheet Information Assets Cash.. Accounts receivable Merchandise inventory... Equipment........ Accumulated depreciation Total assets.. Liabilities and Equity Accounts payable Income taxes payable. Common shares. Retained earnings.... Total liabilities and equity..... December 31 2017 2016 $ 81,200 $ 54,600 43,400 37,800 284,200 249,200 155,400 138,600 (72,800) (47,600) $491,400 $432,600 11,200 $ 32,200 $ 44,800 12,600 364,000 82,600 336,000 40,600 $491,400 $432,600 LAG Network Inc. Income Statement For Year Ended December 31, 2017 Sales Cost of goods sold Gross profit Operating expenses: Depreciation expense............. $ 25,200 233,800 Other expenses Total operating expenses Profit from operations Income taxes Profit ******** $929,600 557,200 $372,400 259,000 $113,400 19,600 $ 93,800 LAG Network Inc. Comparative Balance Sheet Information Assets Cash.. Accounts receivable Merchandise inventory... Equipment........ Accumulated depreciation Total assets.. Liabilities and Equity Accounts payable Income taxes payable. Common shares. Retained earnings.... Total liabilities and equity..... December 31 2017 2016 $ 81,200 $ 54,600 43,400 37,800 284,200 249,200 155,400 138,600 (72,800) (47,600) $491,400 $432,600 11,200 $ 32,200 $ 44,800 12,600 364,000 82,600 336,000 40,600 $491,400 $432,600

Answer rating: 100% (QA)

No Net loss does not always result outflow from oper... View the full answer