Meera Corporation\'s comparative balance sheets are presented below MEERA CORPOR
ID: 2496841 • Letter: M
Question
Meera Corporation's comparative balance sheets are presented below MEERA CORPORATION Comparative Balance Sheets 2014 $14,700 20,800 20,000 70,000 2013 Cash Accounts receivable Land Buildings Accumulated depreciation-buildings $10,700 23,400 26,000 70,000 (10,000) 00) Total $110,500 $120,100 Accounts payable Common stock Retained earnings $12,370 75,000 23,130 $110,500 $28,100 72,000 20,000 $120,100 Total Additional information: 1. Net income was $22,630. Dividends declared and paid were $19,500 2. All other changes in noncurrent account balances had a direct effect on cash flows, except the change in accumulated depreciation. The land was sold for $5,000 (a) Prepare a statement of cash flows for 2014 using the indirect method. (Show amounts that decrease cash flow with either a -sign e.g.-15,000, or in parenthesis e.g. (15,000).)Explanation / Answer
(a) STATEMENT OF CASH FLOWS FOR 2014 INDIRECT METHOD:
CASHFLOW FROM OPERATING ACTIVITIES:
NET INCOME =$22,630
ADD:DEPRECIATION =$5,000
ADD:LOSS ON SALE OF LAND =$1,000
ADD:DECREASE IN ACCOUTS RECEIVABLE=$2,600
LESS:DECREASE IN ACCOUNTS PAYABLES=($15,730)
CASH FLOW FROM OPERATING ACTIVITIES=$15,500
CASH FLOW FROM INVESTING ACTIVITIES:
SALE OF LAND =$5,000
CASH FLOW FROM INVESTING ACTIVITIES=$5,000
CASH FLOW FROM FINANCING ACTIVITIES:
ISSUE OF COMMON STOCK =$3,000
DIVIDEND PAID =($19,500)
CASH FLOW FROM FINANCING ACTIVITIES=($16,500)
NET CASHFLOW DURING THE YEAR =$4,000
ADD:OPENING CASH =$10,700
CLOSING CASH =$14,700
(b)FREE CASHFLOW=$4,000