Question

The comparative balance sheet of Orange Angel Enterprises Inc. at December 31, 20Y8 and 20Y7, is as follows:

		Dec. 31, 20Y8		Dec. 31, 20Y7
Assets
Cash		$60,180		$73,440
Accounts receivable (net)		92,480		99,010
Merchandise inventory		132,110		122,720
Prepaid expenses		5,380		3,720
Equipment		269,120		219,870
Accumulated depreciation-equipment		(69,970)		(53,920)
	Total assets	$489,300		$464,840
Liabilities and Stockholders' Equity
Accounts payable (merchandise creditors)		$102,750		$97,150
Mortgage note payable		0		139,450
Common stock, $1 par		16,000		10,000
Excess of paid-in capital over par		233,000		131,000
Retained earnings		137,550		87,240
	Total liabilities and stockholders’ equity	$489,300		$464,840

Additional data obtained from the income statement and from an examination of the accounts in the ledger for 20Y8 are as follows:

1. Net income, $128,790.
2. Depreciation reported on the income statement, $34,300.
3. Equipment was purchased at a cost of $67,500, and fully depreciated equipment costing $18,250 was discarded, with no salvage realized.
4. The mortgage note payable was not due for six years, but the terms permitted earlier payment without penalty.
5. 6,000 shares of common stock were issued at $18 for cash.
6. Cash dividends declared and paid, $78,480

Required:

Prepare a statement of cash flows, using the indirect method of presenting cash flows from (used for) operating activities. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.

Orange Angel Enterprises Inc.

Statement of Cash Flows

For the Year Ended December 31, 20Y8

Cash flows from (used for) operating activities:

Net income	$fill in the blank 2
Adjustments to reconcile net income to net cash flows from (used for) operating activities:
Depreciation	fill in the blank 4
Changes in current operating assets and liabilities:
Decrease in accounts receivable	fill in the blank 6
Increase in merchandise inventory	fill in the blank 8
Increase in prepaid expenses	fill in the blank 10
Increase in accounts payable	fill in the blank 12
Net cash flows from operating activities		$fill in the blank 13
Cash flows from (used for) investing activities:
Cash paid for equipment	$fill in the blank 15
Net cash flows used for investing activities		fill in the blank 16
Cash flows from (used for) financing activities:
Cash received from issuing common stock	$fill in the blank 18
Cash dividends	fill in the blank 20
Cash paid to retire mortgage note payable	fill in the blank 22
Net cash flows from financing activities		fill in the blank 23
Net decrease in cash		$fill in the blank 25
Cash balance, January 1, 20Y8		fill in the blank 26
Cash balance, December 31, 20Y8		$fill in the blank 27

Answer 1