Prepare a statement of cash flows using the indirect method. Condensed financial
ID: 2416512 • Letter: P
Question
Prepare a statement of cash flows using the indirect method.
Condensed financial data of Pat Metheny Company for 2014 and 2013 are presented below.
PAT METHENY COMPANY
COMPARATIVE BALANCE SHEET
AS OF DECEMBER 31, 2014 AND 2013
2014
2013
$1,790
$1,106
1,755
1,300
1,582
1,901
1,899
1,706
(1,195
(1,170
1,299
1,478
$7,130
$6,321
$1,217
$796
208
250
1,416
1,650
1,894
1,700
2,395
1,925
$7,130
$6,321
PAT METHENY COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2014
$6,825
4,695
2,130
939
1,191
83
1,274
541
263
$470
Additional information:
During the year, $64 of common stock was issued in exchange for plant assets. No plant assets were sold in 2014.
Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
PAT METHENY COMPANY
COMPARATIVE BALANCE SHEET
AS OF DECEMBER 31, 2014 AND 2013
2014
2013
Cash$1,790
$1,106
Receivables1,755
1,300
Inventory1,582
1,901
Plant assets1,899
1,706
Accumulated depreciation(1,195
)(1,170
) Long-term investments (held-to-maturity)1,299
1,478
$7,130
$6,321
Accounts payable$1,217
$796
Accrued liabilities208
250
Bonds payable1,416
1,650
Capital stock1,894
1,700
Retained earnings2,395
1,925
$7,130
$6,321
Explanation / Answer
Pat Metheny Company
STATEMENT OF CASH FLOWS (Indirect Method)
Particulars Amount Amount Cash flows from operating activities Net income $733 Add Depreciation expense (1195-1170) 25 Gain on sale of investments (83) Decrease in inventory 319 Increase in accounts payable 421 Increase in receivables (455) Decrease in accrued liabilities (42) 185 Net cash provided by operating activities $918 Cash flows from investing activities Sale of held-to-maturity investments (1478-1299+83) 262 Purchase of plant assets(1899-1706-64) (129) Net cash provided by investing activities $133 Cash flows from financing activities Issuance of capital stock (1899-1706-64) 129 Retirement of bonds payable (234) Payment of cash dividends (263) Net cash used by financing activities ($368) Net increase in cash $683 Cash, January 1, 2013 $1,106 Cash, December 31, 2013 $1789