Prepare the cash flow statement using the indirect method. E17- -14 Comparative
ID: 2596946 • Letter: P
Question
Prepare the cash flow statement using the indirect method.
E17- -14 Comparative balance sheets for International Company are presented below. INTERNATIONAL COMPANY Comparative Balance Sheets December 31 Assets Cash Accounts receivable o Inventory O Land T Equipment Accumulated depreciation-equipment 2017 2016 $ 73,000 22,000 51o0 76,000 1o 189,000 90 100,000 2 200,000 S (42,000) 2 $545,000 85,000 180,000 75,000 250,000 (66,000) Total $597,000 Liabilities and Stockholders' Equity Accounts payable O Bonds payable F Common stock ($1 par) F Retained earnings 34,000 150,000 214,000 199,000 $ 47,000 200,000 164,000 5 134,000 $597,000 $545,000 Total Additional information: 1. Net income for 2017 was $135,000. 2. Cash dividends of $70,000 were declared and paid. 3. Bonds payable amounting to $50,000 were redeemed for cash $50,000. 4. Common stock was issued for $50,000 cash. 5. Depreciation expense was $24,000.0 6. Sales revenue for the year was $978,000. O 7. Land was sold at cost, and equipment was purchased for cash.Explanation / Answer
Statement of cash flow indirect method :
Cash flow from operating activity Net income 135000 Adjustment to reconcile net income Depreciation expenses 24000 Increase account receivable (9000) Decrease inventory 9000 Increase account payable (13000) Net cash flow from operating activities 146000 Cash flow from investing activities Sale of land 25000 Purchase of equipment (50000) Net cash flow from investing activities (25000) Cash flow from financing activities Dividend paid (70000) Bonds redeem (50000) Common stock issue 50000 Net cash flow from financing activities (70000) Net cash flow 51000 Beginning cash 22000 Ending cash 73000