Check My Work (10 remaining) eBook Problem-Solving Strategy Statement of Cash Fl
ID: 2487564 • Letter: C
Question
Check My Work (10 remaining)
eBook Problem-Solving Strategy
Statement of Cash Flows—Indirect Method
The comparative balance sheet of Amelia Enterprises, Inc. at December 31, 2014 and 2013, is as follows:
Dec. 31, 2014 Dec. 31, 2013
Assets
Cash $55,410 $68,250
Accounts receivable (net) 85,140 92,010
Merchandise inventory 121,610 114,040
Prepaid expenses 4,950 3,460
Equipment 247,750 204,330
Accumulated depreciation-equipment (64,410) (50,110)
Total $450,450 $431,980
Liabilities and Stockholders' Equity
Accounts payable (merchandise creditors) $94,590 $90,280
Mortgage note payable 0 129,590
Common stock, $1 par 14,000 9,000
Paid-in capital in excess of par-common stock 197,000 122,000
Retained earnings 144,860 81,110
Total $450,450 $431,980
Additional data obtained from the income statement and from an examination of the accounts in the ledger for 2014 are as follows:
Net income, $163,200.
Depreciation reported on the income statement, $31,260.
Equipment was purchased at a cost of $60,380, and fully depreciated equipment costing $16,960 was discarded, with no salvage realized.
The mortgage note payable was not due until 2016, but the terms permitted earlier payment without penalty.
5,000 shares of common stock were issued at $16 for cash.
Cash dividends declared and paid, $99,450.
Required:
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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.
Amelia Enterprises, Inc.
Statement of Cash Flows
For the Year Ended December 31, 2014
Cash flows from operating activities:
$
Adjustments to reconcile net income to net cash flow from operating activities:
Changes in current operating assets and liabilities:
Net cash flow from operating activities
$
Cash flows from investing activities:
$
Net cash flow used for investing activities
Cash flows from financing activities:
$
$
Net cash flow used in financing activities
$
Cash at beginning of the year
Cash at end of the year
$
Explanation / Answer
Amelia Enterprises, Inc Statement of Cash Flows For the year ended dec 31,2014 Cash Flow from operating Activity Net Income $ 163,200.00 Depreciation Expense $ 31,260.00 Decrease in Accounts receivable $ 6,870.00 Increase Inventory $ (7,570.00) Increase in Prepid Expnese $ (1,490.00) Increase Accounts Payable $ 4,310.00 Cash flow from operating activity $ 196,580.00 Investing Activity Purchase of new equipment $ 60,380.00 Cash used by investing activity $ (60,380.00) Financing Activity Decrease in mortgage payable $ (129,590.00) Issue of common stock $ 80,000.00 Dividend $ (99,450.00) Cash used by financing activities $ (149,040.00) Opening cash balance $ 68,250.00 Cash used $ (12,840.00) Closing Cash Balance $ 55,410.00