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The comparative balance sheet of Amelia Enterprises, Inc. at December 31, 2010 and 2009, is as follows:


Additional data obtained from the income statement and from an examination of the accounts in the ledger for 2010 are as follows:
Net income, $126,000.
Depreciation reported on the income statement, $41,700.
Equipment was purchased at a cost of $81,400, and fully depreciated equipment costing $22,400 was discarded, with no salvage realized.
The mortgage note payable was not due until 2013, but the terms permitted earlier payment without penalty.
7,000 shares of common stock were issued at $20 for cash.
Cash dividends declared and paid, $76,800.
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. If needed, use the minus sign to indicate cash outflows or a decrease in cash.

Explanation / Answer

Statement of Cash Flows (Indirect method)

Net income                                        126,000

Adjustments to reconcile net income to net cash from operating activities

Decrease in AR                                  8700

Increase in inventory                     -11,200

Increase in prepaid expenses     -1900

Increase in AP                                   6300

Depreciation                                      41,700  

Net cash provided by operating activities             169,600

Cash flows from investing

Cash paid for equipment              -81,400

Net cash used for investing activities                      -81,400

Cash flows from financing

Cash paid to retire mortgage      -168,000

Cash paid for dividends                     -76,800

Cash received for commons stock 140,000

Net cash used for financing activities                      -104,800

Net decrease in cash                                                      -16,600

Cash balance at prior year-end                                  89,900

Cash balance at current year-end                             73,300

Any questions about any of the above figures, just send me a message.

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