Question

Prepare a Statement of Cash Flows for the year ended Dec. 31, 2019, using the indirect method.

Cash balance at prior year-end              $41,000           Gain on sale of machinery                     $2,000

Increase in inventory                            $5,000             Cash received from sale of machinery   $8,500

Depreciation expense                           $4,000             Increase in accounts payable                $1,500

Cash received from issuing stock           $8,000             Net income                                          $23,000

Cash paid for dividends                              $1,000                 Decrease in accounts receivable            $3,000

We bought a car for $40,000, nothing down, and signed a 4 year note for $40,000 to pay for it.

Be sure to include totals for cash from operations, investing and financing.  Include what you think the cash balance on Dec. 31, 2019 is.

Answer 1

Statement of cash flow

For the year ended DEc 31, 2019

Cash flow from operating activities (1)
Net income	23,000
Depreciation expense	4,000
Gain on sale of machinery	-2,000
Accounts payable Increase	1,500
Accounts receivable decrease	3,000
Inventory increase	-5,000
Net cash provided by operating activities		24,500
Cash flow from investing activities (2)
Cash received from sale of machinery	8,500
Net cash flow from investing activities		8,500
cash flow from financing activities (3)
Cash received from issuing stock	8,000
Cash dividend paid	-1,000
Net cash flow from financing activities		7,000
Net Increase in cash (1 + 2 + 3)		40,000
Beginning cash balance		41,000
Ending cash balance		81,000

Cash balance at Dec 31, 2019 = $81,000