Question

The comparative balance sheet for the ZYX Company at December 31, 2019 and 2018 is as...

The comparative balance sheet for the ZYX Company at December 31, 2019 and 2018 is as follows:

12/31/19 12/31/18

Assets:

Cash $146,600 $179,800

Accounts Receivable 224,600 242,000

Merchandise Inventory 321,600 299,200

Prepaid Expenses 13,400 9,600

Equipment 655,000 537,000

Accumulated depreciation-equipment    (170,800) (132,200)

Total Assets $1,190,400 $1,135,400

Liabilities and Stockholders’ Equity

Accounts payable (merchandise creditors)    $250,200 $237,600

Mortgage note payable 0 336,000

Common Stock, $10 par 74,000 24,000

Paid in Capital-common stock 470,000 320,000

Retained Earnings 396,200 217,800

Total Liabilities and Stockholders’ Equity $1,190,400 $1,135,400

Additional data obtained from an examination of the accounts in the ledger for 2019 are as follows:

a) Net Income, $332,000
b) Depreciation reported on the income statement, $83,400
c) Equipment was purchased at a cost of &162,800 and fully depreciated equipment costing $44,800 was discarded.
d) The mortgage note payable was not due until 2021 but the terms permitted earlier payment without penalty
e) 10,000 shares of common stock were issued at $20 for cash
f) Cash dividends declared and paid, $153,600

Instructions: Prepare a statement of cash flows using the indirect method.

Business   Accounting   
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Answer #1

Answer-

ZYX COMPANY
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED 31 DECEMBER,YEAR 2019
Particulars Amount
$
Cash flow from operating activities
Net Income 332000
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation expense 83400
Change in operating assets & liabilities
Decrease in accounts receivable 17400
Incresae in merchandise inventory -22400
Increase in prepaid expenses -3800
Increase in accounts payable 12600
Net cash flow from operating activities (a) 419200
Cash Flow from Investing activities
Cash paid for purchase of equipment -162800
Net cash Flow used for Investing activities (b) -162800
Cash Flow from Financing activities
Cash paid for dividends -153600
Cash received from sale of common stock 200000
Mortgage note payable paid -336000
Net cash Flow from Financing activities (c) -289600
Net Change in cash c=a+b+c -33200
Beginning cash balance 179800
Closing cash balance 146600
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