Question

Selected financial information for the Adelphi Company for the fiscal years ended December 31, 2018 and 2017 follows. Prepare a cash flow statement using the indirect method. Properly title the statement.

	2018	2017
Cash balance	$113,500	$37,500
Net income	142,500	162,000
Depreciation Expense	42,000	35,000
Purchase of Plant Assets	135,000	125,000
Disposal of Plant Assets	40,000	50,000
Gain (Loss) on Disposal of Plant Assets	(10,000)	5,000
Accounts Receivable Balance	64,500	58,000
Accounts Payable Balance	42,000	39,000
Interest Expense	8,000	6,000
Income Taxes Paid	35,000	28,000
Dividends Paid	30,000	25,000
Common Stock Issued for Cash	20,000	0

Answer 1

Answer:

Adelphi Company
Cash flow statement (Indirect)
For the year ended December 31,2018
Cash flows from operating activities:
Net income		$142,500
Adjustments:
Depreciation expense	$42,000
Loss on disposal of plant assets	$10,000
Increase in accounts receivable	($6,500)
Increase in accounts payable	$3,000	$48,500
Net Cash flows from operating activities (i)		$191,000
Cash flows from investing activities:
Purchase of plant assets	($135,000)
Disposal of plant assets (40000-10000 loss)	$30,000
Net Cash flows from investing activities (ii)		($105,000)
Cash flows from financing activities:
Dividend paid	($30,000)
Common stock issued for Cash	$20,000
Net Cash flows from financing activities (iii)		($10,000)
Net increase(decrease) in cash (i)+(ii)+(iii)		$76,000
Cash balance, Dec 31,2018		$37,500
Cash balance, Dec 31,2019		$113,500