CNotszo.m m.tpx?_-0.5023274283593266 1528667181015 PB12-3 Preparing a Statement
ID: 2408056 • Letter: C
Question
CNotszo.m m.tpx?_-0.5023274283593266 1528667181015 PB12-3 Preparing a Statement of Cash Flows (Indirect Method) [LO 12-2, LO 12-3, LO 12-4, LO 12-5) Audio CClty, Inc is developing its annual tnancial statements at Decemher 31 The statements are complete cxcept for the statement of cahows The completed comparativ halance sheets and income statement Current Previous Year Year Balance Sheet at December 31 S 35 2D 5 43 DXI 15,DD0 16,000 15,000 203,000 140,000 11,000 Accounts Recaivable Invenlory Accumulated Depreciation-Equipment 45,000) 35,000) S220,20S178 000 Accounts Payable Salaries and Wages Payable Note Payable (long tem 5 7,000 5 17,000 1,000 55,000 5,000 80,000 60,000 2,200 Common Stock Retained Earnings S220,2D0 5178,D ncome Statement Sales Revenue Cost ot Goods Sold Other Fxpenses S170,000 45 00 S 45,000 Nel IncutrIe Additional Dala Bought equipment for cash $63,000 b. Paid S10,000 on the long term note payable c. Issued new shares of stock for $20,000 cash d Dividends ot $4,000 were pad in cash. e Other expenses included depreciation, S10alaries and wages, S15,DDtaxes, S io f Accounts Payable indudes only inventary purchases made on redit BecaLE,e a liability relating to taxes does '01 cxisl, assur"?lhal they were fully paid in cash Required: 1. Prepare the statement of cash flows for the current year ended December 31 using the indirect method. (Amounts to be deducted should be Indlcated by a minus slgn.) O lype hene to searchExplanation / Answer
Cash flow Statement Cash flows from operating activities: Net income for the year 45000 Adjustment for the reconciliation Depreciation 10000 Decrease in Accounts receivable 4000 Increase in inventory -1000 Decrease n Accounts payab;e -10000 Incnrease in salaries payable 1200 Net cash provided from operating activities 49200 Cash flows from Investing activities: Purchase of equipment -63000 Net cash used in investing activities -63000 Cash flows from financing activities; Issue of shares 20000 Long term notes repaid -10000 Dividend paid -4000 Net cash used in financing activities 6000 Net decrease in cash -7800 Cash balance in beginning 43000 Ending cash balance. 35200