Prepare a statements of cash flows using the indirect method. Show Work. Show am
ID: 2467600 • Letter: P
Question
Prepare a statements of cash flows using the indirect method. Show Work. Show amounts that decrease cash flows in parenthesis ()
Comparative Balance Sheets Dec 31 Dec 31
2013 2012
Cash $ 306,600 $ 160,650
Accounts receivable 156,450 122,850
Inventory 157,500 189,000
Prepaid expenses 18,900 28,350
Plant assets 1,338,750 1,102,500
Accumulated depreciation -472,500 -393,750
Patents 160,650 182,700
$1,666,350 $1,392,300
Accounts payable $ 160,650 $ 176,400
Accrued liabilities 63,000 44,100
Mortgage payable 472,500
Preferred stock 551,250
Additional paid-in capital-preferred 126,000
Common stock 630,000 630,000
Retained earnings 135,450 69,300
$1,666,350 $1,392,300
1. The Accumulated Depreciation account has been credited only for the depreciation expense for the period.
2. The Retained Earnings account has been charged for dividends of $155,400 and credited for the net income for the year.
The income statement for 2015 is as follows:
Sales revenue $2,079,000
Cost of sales 1,143,450
Gross profit 935,550
Operating expenses 714,000
Net income $ 221,550
Explanation / Answer
Since Income statement for the year 2013 has not been given (given for 2015), cash flow from operating activities can't be ascertained.
Cash flow Statement For the year Dec 31, 2013 Amount ($) Cash flow from operating activities 0 Cash flow from Investing activities: Investment in plant assets (236,250) Sale of patents 22,050 Cash flow from investing activities (214,200) Cash flow from financing activities: Payment of mortgage payable (472,500) Issue of prefered stock 677,250 Dividend Paid 155,400 Cash flow from financing activities 360,150 Total cash flow for the year 145,950 Beginning Cash 160,650 Ending Cash 306,600