Question

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

1		Dec. 31, 20Y8	Dec. 31, 20Y7
2	Assets
3	Cash	$146,190.00	$179,070.00
4	Accounts receivable (net)	224,940.00	241,100.00
5	Merchandise inventory	322,390.00	299,700.00
6	Prepaid expenses	12,670.00	9,430.00
7	Equipment	655,160.00	537,730.00
8	Accumulated depreciation-equipment	(170,790.00)	(131,900.00)
9	Total assets	$1,190,560.00	$1,135,130.00
10	Liabilities and Stockholders’ Equity
11	Accounts payable (merchandise creditors)	$250,640.00	$237,300.00
12	Mortgage note payable	0.00	336,600.00
13	Common stock, $10 par	73,000.00	23,000.00
14	Paid-in capital: Excess of issue price over par—common stock	500,000.00	310,000.00
15	Retained earnings	366,920.00	228,230.00
16	Total liabilities and stockholders’ equity	$1,190,560.00	$1,135,130.00

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

A.	Net income, $291,590
B.	Depreciation reported on the income statement, $83,790
C.	Equipment was purchased at a cost of $162,330 and fully depreciated equipment costing $44,900 was discarded, with no salvage realized.
D.	10,000 shares of common stock were issued at $24 for cash.
E.	The mortgage note payable was not due until 2018 but the terms permitted earlier payment without penalty.
F.	Cash dividends declared and paid, $152,900

Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.

Labels and Amount Descriptions
Cash used for dividends
Cash used for equipment
Cash used for merchandise
Cash used for purchase of land
Cash used to retire mortgage note payable
Cash from customers
Cash from sale of common stock
December 31, 20Y8
Decrease in cash
Decrease in merchandise inventory
Decrease in accounts payable
Decrease in accounts receivable
Decrease in prepaid expenses
Depreciation
For the Year Ended December 31, 20Y8
Gain on disposal of equipment
Gain on sale of investments
Increase in accounts payable
Increase in accounts receivable
Increase in cash
Increase in merchandise inventory
Increase in prepaid expenses
Loss on disposal of equipment
Loss on sale of investments
Net cash flow from financing activities
Net cash flow from investing activities
Net cash flow from operating activities
Net cash flow used for financing activities
Net cash flow used for investing activities
Net cash flow used for operating activities
Net income
Net loss

Answer 1

Statement of cash flow :

cash flow from operating activities
Net income		291590
Adjustment to reconcile net income to
Net cash flow from operating activities
Depreciation expense	83790
Loss on discarded on equipment	117430
Decrease account receivable	16160
Increase inventory	-22690
Increase prepaid expense	-3240
Increase account payable	13340
		204790
Net cash flow from operating activities		496380
Cash flow from investing activities
Purchase equipment		-279760
Cash flow from financing activities
Repaid mortgage notes payable	-336600
Dividend paid	-152900
Issue common Stock	240000
Net cash used in financing activities		-249500
Net cash increase (decrease)		-32880
Beginning Cash		179070
Ending Cash		146190