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 | $ |
Statement of cashflows | ||
Cash flows from operating activities: |
||
Net Income | 76000 | |
Adjustments to reconcile net income to net cash flow from operating activities: | ||
Depreciation expense | 37000 | 113000 |
Changes in current operating assets and liabilities: | ||
Decrease in Accounts Receivable | 7000 | |
Increase in Inventories | -16500 | |
Increase in Accounts Payable | 1000 | |
Decrease in taxes Payable | -2500 | -11000 |
Net cash flow from operating activities | 102000 | |
Cash flows from investing activities: | ||
Purchase of Equipment | $25,000 | |
Net cash flow used for investing activities | ($25,000) | |
Cash flows from financing activities: | ||
Issue of Shares | $32,000 | |
Dividends paid | -13000 | |
Net cash flow provided by financing activities | $19,000 | |
$96,000 | ||
Cash at the beginning of the year | 74000 | |
Cash at the end of the year | $170,000 |
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