Talware purchased $16,800 of equipment for cash in 2011. They also issued 11,200 common shares for $2.50 per share, raising $28,000. Talware paid $51,800 in cash dividends. To prepare a statement of cash flows for 2014 using the indirect method, the supporting calculations show cash from operating activities of $67,200, cash used in investing activities of $16,800, and cash from financing activities of -$23,800. A net loss does not necessarily mean there will be a cash outflow from operating activities, as non-cash expenses like depreciation are added back.

1. Additional information regarding Talware's activities during 2011 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
2014 that reports the cash inflows and outflows from operating activities according to the
indirect method. Show your supporting t calculations. Analysis Component: Assume that
Talware had a net loss instead of a net income. Does a net loss mean that there will always be a
cash outflow from operating activities on the statement of cash flows?
Solution
Particulars Amount Amount Opening cash and cash equivalents    54,600.00   Â
54,600.00 Cash flow from operating Activities Retained Earnings    93,800.00 Add :
Depreciation    25,200.00 Add : Taxes    19,600.00 Increase in Accounts receivable
   (5,600.00) Increase in Inventory (35,000.00) Decreasein AP (12,600.00) Taxes Paid
(18,200.00) Cash flow from operating Activities    67,200.00 Cash flow from Investing
Activities Purchase of Equipment (16,800.00) Cash flow from Investing Activities (16,800.00)
Cash flow from Financing Activities Issue of Shares    28,000.00 Dividend Paid
(51,800.00) (23,800.00) Cash flow from Financing Activities Closing cash and cash equivalents
   81,200.00    81,200.00