Instructions Prepare a statement of cash flows using the indirect method. Statem
ID: 2499699 • Letter: I
Question
Instructions
Prepare a statement of cash flows using the indirect method.
Statement of Cash Flows. (16 points)
Sharp Company
Comparative Balance Sheet
December 31
2015 2014
Cash $ 54,000 $ 36,000
Accounts receivable, net 53,000 57,000
Inventory 161,000 123,000
Land 180,000 285,000
Building 300,000 300,000
Accumulated depreciation—building (75,000) (60,000)
Equipment 1,565,000 900,000
Accumulated depreciation—equipment (177,000) (141,000)
$2,061,000 $1,500,000
Accounts payable $ 202,000 $ 150,000
Bonds payable 450,000 -0-
Capital stock, $10 par 1,250,000 1,250,000
Retained earnings 159,000 100,000
$2,061,000 $1,500,000
Additional Data:
1. Net income for the year amounted to $109,000.
2. Cash dividends were paid amounting to 4% of par value.
3. Land was sold for $120,000.
4. Sharp sold equipment, which cost $225,000 and had accumulated depreciation of $90,000, for $115,000.
Problem II Sharp Company Statement of Cash Flows For the Year Ended December 31, 2015 Cash flows from operating activities: Net Income Adjustments to reconcile net income to net cash provided by operating activities: Decrease in A/R Increase in inventory Increase in A/P Gain on sale of land Loss on sale of equipment Depreciation expense-building Depreciation expense-equipment 0 Net cash used/provided by operating activities 0 Cash flows from investing activities: Sale of land Sale of equipment Purchase of equipment Net case used by investing activities Net cash used/provided by investing activities 0 Cash flows from financing activities: Payment of cash dividend Issuance of bond Net cash used/provided by financing activities 0 Net increase/decrease in cash 0 Cash, January 1, 2015 Cash, December 31, 2015 0Explanation / Answer
sharp company
Statement of cash flow
Net income $109,000 Adjsutment: +Decrease in Account receivable $4,000 -increase in inventory ($38,000) +increase in account payable $52,000 - gain on sale of land ($15,000) + loss on sale of equipment $20,000 + Depreciation expense - building $15,000 +Depreciation expense - equipment $126,000 164,000 Net cash provided by operating activities $273,000 Cash flow from investing activities Sale of land $120,000 Sale of equipment 115,000 Purchase of equipment ( 890,000) Net cash used by investing activities (655,000) Net cash provided by financing activities Paymnet for cash dividend ($50,000) Issuance of bond $450,000 $400,000 Net cash $18,000 Beginning cash $36,000 Ending cash balance $54,000