The comparative balance sheet of Tru-Built Construction Inc. for December 31, 20
ID: 2486716 • Letter: T
Question
The comparative balance sheet of Tru-Built Construction Inc. for December 31, 2014 and 2013, is as follows: Dec. 31, 2014 Dec. 31, 2013 Assets Cash $196 $63 Accounts receivable (net) 112 80 Inventories 70 44 Land 160 179 Equipment 90 69 Accumulated depreciation-equipment (24) (12) Total $604 $423 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $76 $63 Dividends payable 12 - Common stock, $10 par 40 20 Paid-in capital in excess of par-common stock 95 49 Retained earnings 381 291 Total $604 $423 The following additional information is taken from the records: Land was sold for $48. Equipment was acquired for cash. There were no disposals of equipment during the year. The common stock was issued for cash. There was a $130 credit to Retained Earnings for net income. There was a $40 debit to Retained Earnings for cash dividends declared. Hide a. Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Use the minus sign to indicate cash out flows, cash payments, decreases in cash and for any adjustments, if required.
Explanation / Answer
Cash Flow statement
Indirect Method
Cash Flows from Operating Activities:
Net income
$ 130
Add: Depreciation (24-12)
$ 12
Less: Profit on sale of land = 48- (179-160)
$ (29)
Less: Increase in Accounts Receivables (112-80)
$ (32)
Less: Increase in Inventories (70-44)
$ (26)
Add: Increase in Accounts Payable (76-63)
$ 13
Add: Increase in Dividend Payable (12-0)
$ 12
$ 80
Cash Flows from Investing Activities:
Sale of land
$ 48
Equipment purchased (90-69)
$ (21)
$ 27
Cash Flows from Financing Activities:
Common Stock Issued (40-20)+ (95-49)
$ 66
Cash Dividend paid
$ (40)
$ 26
Net Cash flows
$ 133
Add: Beginning Cash balance
$ 63
Ending Cash balance
$ 196
Cash Flow statement
Indirect Method
Cash Flows from Operating Activities:
Net income
$ 130
Add: Depreciation (24-12)
$ 12
Less: Profit on sale of land = 48- (179-160)
$ (29)
Less: Increase in Accounts Receivables (112-80)
$ (32)
Less: Increase in Inventories (70-44)
$ (26)
Add: Increase in Accounts Payable (76-63)
$ 13
Add: Increase in Dividend Payable (12-0)
$ 12
$ 80
Cash Flows from Investing Activities:
Sale of land
$ 48
Equipment purchased (90-69)
$ (21)
$ 27
Cash Flows from Financing Activities:
Common Stock Issued (40-20)+ (95-49)
$ 66
Cash Dividend paid
$ (40)
$ 26
Net Cash flows
$ 133
Add: Beginning Cash balance
$ 63
Ending Cash balance
$ 196