Question

The balance sheet for Plasma Screens Corporation, along with additional information, are provided below: PLASMA SCREENS CORPORATION Balance Sheets December 31, 2018 and 2017 2018 2017 Assets: Current assets: Cash $ 144,850 $ 156,500 Accounts receivable 76,400 90,000 Inventory 91,000 76,400 Prepaid rent 3,200 1,600 Long-term assets: Land 460,000 460,000 Equipment 756,000 650,000 Accumulated depreciation (418,000) (260,000) Total assets $ 1,113,450 $ 1,174,500 Liabilities and Stockholders' Equity: Current liabilities: Accounts payable $ 95,000 $ 81,400 Interest payable 6,750 13,500 Income tax payable 7,200 4,600 Long-term liabilities: Notes payable 112,500 225,000 Stockholders' equity: Common stock 680,000 680,000 Retained earnings 212,000 170,000 Total liabilities and stockholders' equity $ 1,113,450 $ 1,174,500 Additional Information for 2018: 1. Net income is $65,000. 2. The company purchases $106,000 in equipment. 3. Depreciation expense is $158,000. 4. The company repays $112,500 in notes payable. 5 .The company declares and pays a cash dividend of $23,000. Required: Prepare the statement of cash flows using the indirect method. (List cash outflows and any decrease in cash as negative amounts.)

Answer 1

Statement of cash flow

Cash flow from operating activities
Net income		65000
Adjustment to reconcile net income to net cash flow from operating activities
Depreciation expense	158000
Decrease account receivable	13600
Increase inventory	-14600
Increase prepaid rent	-1600
Increase account payable	13600
Decrease interest payable	-6750
Increase income tax payable	2600
		164850
Net cash flow from operating activities		229850
cash flow from investing activities
Purchase equipment	-106000
Net cash used in investing activities		-106000
Cash flow from financing activities
Repay bonds payable	-112500
Dividend paid	-23000
Net cash used in financing activities		-135500
Net cash increase (decrease)		-11650
Beginning cash		156500
Ending Cash		144850