Question

Use the following information of VPI Co. to prepare a statement of cash flows for the year ended December 31 using the indirect method. (Amounts to be deducted should be indicated by a minus sign.)

Cash balance at prior year-end	$	43,400			Gain on sale of machinery	$	2,850
Increase in inventory		8,400			Cash received from sale of machinery		11,200
Depreciation expense		7,400			Increase in accounts payable		3,200
Cash received from issuing stock		11,400			Net income		57,000
Cash paid for dividends		4,400			Decrease in accounts receivable		6,400

Answer 1

Statement of cash flow
Cash from operating activities
Net income				57,000
Adjustments to reconcile net income to
Cash from operating activities
Depreciation expense				7,400
Gain on sale of machinery				-2,850
increase in inventory				-8,400
increase in accounts payable				3,200
Decrease in accounts receivable				6,400
Net cash provided by operating activities					62,750
Cash from investing activities
Cash received from sale of machinery					11,200
Cash from financing activity
cash received from issuing stock				11,400
Cash paid for dividends				-4,400
Net cash provided by financing activitiy					7,000
Net increase in cash					80,950
Cash balance at prior year-end					43,400
Cash at year end					124,350