Question

If anyone could please answer this using the Indirect Method of Cash Flows. I really just...

If anyone could please answer this using the Indirect Method of Cash Flows. I really just need a better understanding of it so if you could show why you put a certain number it would be great. Thank You!

Changes in account balances for Dumpster Fire, Inc. during 2016 were as follows:

Decrease in Accounts Payable 15,000

Increase in Accounts Receivable 22,000

Decrease in Accumulated Depreciation 7,000

Increase in Common Stock 75,000

Decrease in Copyright 12,000

Increase in Dividends Payable 8,000

Increase in Equipment 11,000

Decrease in Interest Payable 2,000

Increase in Inventory 4,000

Increase in Long-Term Notes Payable 10,000

Decrease in Prepaid Insurance 1,000

Decrease in Retained Earnings 20,000

Decrease in Short-term investments 3,000

Increase in Supplies 6,000

Other Info: Equipment with an original cost of $25,000 and a net book value of $7,000 was sold at a $3,000 loss. The company negotiated converting an account payable into a longer duration obligation. They previously had no longer duration obligations, and entered into no other longer duration obligations during the year. Dividends of $15,000 were declared. No intangible assets were purchased or sold. Short term investments were sold at a $1,000 loss. Please calculate cash flow from operations, cash flow from investing activity, and cash flow from financing activity.

Homework Answers

Answer #1
Statement of Cash Flows
Cash Flow from Operations
Decrease in Accounts payable -$15,000.00
Increase in Accounts Receivable -$22,000.00
Increase in Dividends payable $8,000.00
Decrease in Interest payable -$2,000.00
Increase in inventory -$4,000.00
Decrease in prepaid insurance $1,000.00
Loss on sale of investments $1,000.00
Loss on sale of equipment $3,000.00
Decrease in Accumulated Depreciation -$7,000.00 -$37,000.00
Investing Activity
Decrease in copywright $12,000.00
Increase in equipment -$11,000.00
Decrease in short term investments $3,000.00
Decrease in equipment $4,000.00 $8,000.00
Financing Activity
Increase in common stcok $75,000.00
Increase in long term notes payable $10,000.00 $85,000.00
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