Prepare the statement of cash flows for the year ended December 31, 2011 using t
ID: 2445185 • Letter: P
Question
Prepare the statement of cash flows for the year ended December 31, 2011 using the indirect method. Could someone please help me with this?
2011 2010
Cash 254,000 126,000
Accounts Receivable 80,000 60,000
Inventory 30,000 20,000
Property & Equipment 420,000 300,000
Accumulated Depreciation (120,000) (90,000)
Total 664,000 416,000
Accounts payable 16,000 40,000
Wages payable 14,000 2,000
Note payable 188,000 150,000
Contributed capital 208,000 124,000
Retained Earnings 228,000 100,000
Total 664,000 416,000
Income Statement for 2011
Sales 480,000
Cost of goods sold 180,000
Other expenses 120,000
Net Income 180,000
Additional Data:
Bought equipment for cash $220,000
Sold building that cost $100,000 for $90,000
Paid $60,000 on the long term note payable.
Issued new shares of stock for $100,000 cash
Paid dividends of $20,000 in cash
Paid $40,000 dividends in stock.
Other expenses included depreciation, $50,000; amortization, $40,000; taxes, $50,000
Acquired equipment costing $80,000 for a mortgage
Thank you
Explanation / Answer
Indirect method of cash flow
Net income $180,000 Adjsutment for : Depreciation and amortisation $90,000 Loss on sale of buildings $10,000 Increase in accounts recievable ($20,000) increase in inventory ($10,000) decrease in accounts payable ($24,000) increase in wages payable $12,000 Net cash flow from operating activities $58,000 Net cash flow from investing activities Equipment ($220,000) Building 90,000 Net cash flow from investing activities ($130,000) Net cash flow from financing activities Paid long term note payable ($60000) dividends paid ($20,000) shares issued $100,000 Net cash flow from financing activities $20,000 Net cash change $128,000 Cash at the beginning $126,000 Cash at the end $254,000