Prepare a statement of cash flows using the indirect method for Venice Company f
ID: 2517581 • Letter: P
Question
Prepare a statement of cash flows using the indirect method for Venice Company for the year ended December 31, 2017.
Additional data for the year ended December 31, 2017 are as follows:
A. Fully depreciated equipment costing $60,000 was scrapped at no salvage value, and new equipment was purchased for $183,200.
B. Bonds payable for $100,000 were retired at face value.
C. 5,000 shares of common stock were issued for cash at $13.80 per share.
D. cash dividends declared and paid were $25,000.
Prepare a statement of cash flows using the indirect method for Venice Company for the year ended December 31, 2017.
The comparative balance sheet of Venice Company, Inc. for December 31, 2017 and 2016 appears below: 12/31/2017 12/31/2018 Cash Accounts Receivable (net Inventories Equipment Accumulated depreciation-equipment Totals: $53,000 37,000 108,500 573,200 $120,000 48,000 100,000 450,000 [-142000] [-176000] $629,700 $542,000 Accounts payable Bonds payable, due June 2017 Common stock, $10 par Paid-in capital in excess of par - Common Stock Retained Earnings Totals: $62,500 0 335,000 74,000 158,200 $629,700 $43,800 100,000 285,000 55,000 58,200 $542,000 The income statement for the year ended December 31,2017 appears below: Sales Cost of merchandise sold Gross Profit $625,700 340,000 285,700 Operating Expenses Depreciation expense Other operating expenses Total: $26,000 68,000 94,000 Operating Income Interest expense income before income tax income tax net income 191,700 185,700 185,700 60,700 125,000Explanation / Answer
Cash Flow statement(Indirect method) Cash flow from operating activities Net income 125000 Adjustments to net income to reconcile net income to cash flow from operatinng activities: depreciation 26000 decrease in accounts receivable(37000-48000) 11000 increase in inventories(108500-100000) -8500 increase in accounts payable(43800-62500) 18700 Total adjustments 47200 Net cash flow from operating activities 172200 Cash flow from investing activities: Purchase of equipment -183200 Net cash flow from investing activities -183200 Cash flow from Financing activities: Retirement of bonds payable -100000 Issue of stock(5000*13.8) 69000 Dividends declared and paid -25000 Net cash flow from Finance activities -56000 Net change in cash during the year -67000 Add:cash at beginning of year 120000 cash at ethe end of year $53000