Dec 31,2013 Dec 31,2012 Assets: Cash $227,110 $210,050 Accounts Receivable(net)

Question

Dec 31,2013 Dec 31,2012
Assets:
Cash $227,110 $210,050
Accounts Receivable(net) 82,270 75,440
Inventories 232,260 223,360
Investments 0 86,540
Land 119,130 0
Equipment 256,250 197,480
Accumulated Depreciation
Equipment (59,990) (53,250)
TOTAL 857,030 739,620

Liabilities & Stockholders
Equity:
Accounts Payable
Merchandise Creditors 155,120 145,710
Accrued Expenses Payable
(operating expenses) 15,430 19,230
Dividends Payable 8,750 6,660
Common Stock, $10 par 46,280 36,240
Paid in Capital in excess
of oar common stock 173,980 100,590
Retained Earnings 457,650 431,190
TOTAL: 857,030 739,620
The following additional information was taken from the records
(a) The investments were sold for $101,250 cash
(b) Equipment & land were acquired for cash
(c) There were no disposals of equipment during the year
(d) The common stock was issued for cash
(e) There was a $61,220 credit to Retained Earnings for net income
(f) There was a $34,760 debit to Retained Earnings for cash dividends declared
*Prepare a statement of cash flows, using the indirect method of presenting CASH FLOWS FROM OPERATING ACTIVITIES. Use a minus sign to indicate cash outflows, negative amounts or a decrease in cash

Explanation / Answer

Note: Liabilities & Stockholders Equity total amount is given as $857,030 but it's actual & correct total is $857,210. Difference is $180, due to this reason closing cash balance as per cash flow statement is differ from given balance sheet cash closing balance, difference amount is $180. Cash Flow Statement: ( Indirect Method) Cash flow from operating activities: Net income $61,220 (+) Depreciation 6740 (+) Increase in creditors 9410 (+) Increase in dividend payable 2090 (-) Increase in accounts receivables -6830 (-) Increase in Inventories -8900 (-) Profit on sale of investments -14710 (-) Decrease in accrued expense payable -3800 -16000 Net cash flow from operating activities: $45,220 Cash flow from Investing activities: (+) Sale of investments 101250 (-) Purchase of land -119130 (-) Purchase of equipment -58770 Net cash floe from Investing activities: -76650 ($31,430) Cash flow from Financing activities: (+) Issue of common stock 10040 (+) Increase in paid in capital in excess 73390 (-) Dividends paid -34760 Net cash flow from Financing activities: 48670 $17,240 Add: Biginning Cash Balance $210,050 Closing Cash Balance: $227,290 Cash Flow Statement: ( Indirect Method) Cash flow from operating activities: Net income $61,220 (+) Depreciation 6740 (+) Increase in creditors 9410 (+) Increase in dividend payable 2090 (-) Increase in accounts receivables -6830 (-) Increase in Inventories -8900 (-) Profit on sale of investments -14710 (-) Decrease in accrued expense payable -3800 -16000 Net cash flow from operating activities: $45,220 Cash flow from Investing activities: (+) Sale of investments 101250 (-) Purchase of land -119130 (-) Purchase of equipment -58770 Net cash floe from Investing activities: -76650 ($31,430) Cash flow from Financing activities: (+) Issue of common stock 10040 (+) Increase in paid in capital in excess 73390 (-) Dividends paid -34760 Net cash flow from Financing activities: 48670 $17,240 Add: Biginning Cash Balance $210,050 Closing Cash Balance: $227,290
Difference in closing cash balance $180 (227290 - 227110), is occured due to mis balance of assets and liabilities. Thank you.... Cash Flow Statement: ( Indirect Method) Cash flow from operating activities: Net income $61,220 (+) Depreciation 6740 (+) Increase in creditors 9410 (+) Increase in dividend payable 2090 (-) Increase in accounts receivables -6830 (-) Increase in Inventories -8900 (-) Profit on sale of investments -14710 (-) Decrease in accrued expense payable -3800 -16000 Net cash flow from operating activities: $45,220 Cash flow from Investing activities: (+) Sale of investments 101250 (-) Purchase of land -119130 (-) Purchase of equipment -58770 Net cash floe from Investing activities: -76650 ($31,430) Cash flow from Financing activities: (+) Issue of common stock 10040 (+) Increase in paid in capital in excess 73390 (-) Dividends paid -34760 Net cash flow from Financing activities: 48670 $17,240 Add: Biginning Cash Balance $210,050 Closing Cash Balance: $227,290

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