Question

On the basis of the following data for Breach Co. for the current and preceding years...

On the basis of the following data for Breach Co. for the current and preceding years ended December 31, prepare a statement of cash flows using the indirect method. Assume that equipment costing $25,000 was purchased for cash and no long-term assets were sold during the period.

Stock was issued for cash-3,200 shares at par.

Net income for the current year was $76,000.

Cash dividends declared and paid were $13,000.

Current Year

Prior Year

Assets

Cash

$ 170,000   

$74,000   

Accounts Receivable (net)

78,000   

85,000   

Inventories

106,500   

90,000   

Equipment

395,000   

370,000   

Accumulated Depreciation

(195,000)   

(158,000)  

Total assets

$ 554,500   

$461,000   

Liabilities and stockholders' equity

Accounts Payable (merchandise creditors)

$51,000   

$50,000   

Taxes Payable

2,500   

5,000   

Common Stock, $10 par

262,000   

230,000   

Retained Earnings

239,000   

176,000   

Total Liabilities and Stockholders' Equity

$ 554,500   

$461,000   

Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.

Breach Co.

Statement of Cash Flows

For Year Ended December 31

Cash flows from operating activities:

$

Adjustments to reconcile net income to net cash flow from operating activities:

Changes in current operating assets and liabilities:

Net cash flow from operating activities

$

Cash flows from investing activities:

$

Net cash flow used for investing activities

Cash flows from financing activities:

$

Net cash flow provided by financing activities

$

Cash at the beginning of the year

Cash at the end of the year

$
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Answer #1

Statement of cash flow :

Cash flow from operating activities
Net income 76000

Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation expense 37000
Changes in current operating assets and liabilities:
Decrease account receivable 7000
Increase inventory -16500
Increase account payable 1000
Decrease taxes payable -2500
Net Cash flow from operating activities 102000
Cash flow from investing activities
Equipment purchase -25000
Net cash flow used for investing activities -25000
Cash flows from financing activities:
Stock issue 32000
Dividend paid -13000
Net cash flow provided by financing activities 19000
Net Cash flow 96000
Cash at the beginning of the year 74000
Cash at the end of the year 170000
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