The comparative balance sheets for Ashley Company as of December 31 are presente
ID: 2451134 • Letter: T
Question
The comparative balance sheets for Ashley Company as of December 31 are presented below.
ASHLEY COMPANY Comparative Balance Sheets December 31
Assets 2013 2012
Cash $70,600 $45,220
Acct receivable 43,599 61,607
Inventory 151,897 141,806
Prepaid expense 15,290 21,335
Land 105,700 130,600
Equipment 228,359 155,043
Acc. depr. - equipment (45,192) (35,358)
Building 199,500 199,500
Acc. depr. - building (59,850) (39,900)
Total $709,903 $679,853
Liabilities and Stockholders' Equity
Acct Payable $47,460 $39,754
Bonds payable $261,050 $300,300
Common stock, $1 par $197,650 $158,400
Retained earnings $203,743 $181,399
Total $709,903 $679,853
Additional information:
1.Operating expenses include depreciation expense of $41,747 and charges from prepaid expenses of $6,045. 2.Land was sold for cash at book value.
3.Cash dividends of $14,684 were paid.
4.Net income for 2013 was $37,028.
5.Equipment was purchased for cash. In addition, equipment costing $22,162 with a book value of $10,199 was sold for $6,272 cash.
6.Bonds were converted at face value by issuing 39,250 shares of $1 par value common stock.
Instructions: (24 points) Prepare a statement of cash flows for the year ended December 31, 2013, using the indirect method.
Explanation / Answer
New Purchase of equipment =(228359+22162-155043)=95478
ASHLEY COMPANY Statement of Cash FlowsFor the Year Ended December 31, 2013 Cash flows from operating activities Net income 37028 Depreciation expense 41747 Loss on sale of equipment 3927 Decrease in accounts receivable 18008 Increase in inventory -10091 Decrease in prepaid expenses 6045 Increase in accounts payable 7706 67342 Net cash provided by operating activities 104370 Cash flows from investing activities Sale of land 24900 Sale of equipment 6272 Purchase of equipment -95478 Net cash used by investing activities -64306 Cash flows from financing activities Payment of cash dividends -14684 Net cash used by financing activities -14684 Net increase in cash 25380 Cash at beginning of period 45220 Cash at end of period 70600