Prepare a statement of cash flows for 2017 using the indirect method. (Show amou
ID: 2532847 • Letter: P
Question
Prepare a statement of cash flows for 2017 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).)
Compute free cash flow.
MIROZ CORPORATION
Comparative Balance Sheets
December 31 2017 2016 Cash $18,700 $22,700 Accounts receivable 24,700 22,300 Investments 25,000 16,000 Equipment 59,000 70,000 Accumulated depreciation (14,500 ) (10,000 ) Total $112,900 $121,000 Accounts payable $13,600 $11,100 Bonds payable 6,000 30,000 Common stock 50,000 45,000 Retained earnings 43,300 34,900 Total $112,900 $121,000 Additional information: 1. Net income was $17,700. Dividends declared and paid were $9,300. 2. Equipment which cost $11,000 and had accumulated depreciation of $2,000 was sold for $4,000. 3. All other changes in noncurrent account balances had a direct effect on cash flows, except the change in accumulated depreciation.
Explanation / Answer
2.
MIROZ CORPORATION Statement of Cashflows For the year Ended December 31, 2017 Cash flows from operating activities Net Income $ 17,700 Adjustments to reconcile net income to : Depreciation expense $ 6,500 14500-10000+2000 Loss on sale of equipment $ 5,000 11000-2000-4000 Increase in accounts receivable $ (2,400) 22300-24700 Increase in accounts payable $ 2,500 13600-11100 $ 11,600 Net cash flow from operating activities $ 29,300 Cash flows from investing activities Cash paid for purchase of investment $ (9,000) 16000-25000 Cash received from sale of equipment $ 4,000 Net cash used for investing activities $ (5,000) Cash flows from financing activities Cash paid for dividend $ (9,300) Cash paid for redemption of bonds $ (24,000) 6000-30000 Cash received from issue of shares $ 5,000 50000-45000 Net cash flow used by financing activities $ (28,300) Net Decrease in cash and cash equivalents $ (4,000) Cash and cash equivalents at beginning of period $ 22,700 Cash and cash equivalents at end of period $ 18,700