Statement of cash flows-indirect method The comparative balance sheet of Meerick

Question

Statement of cash flows-indirect method The comparative balance sheet of Meerick Equipment Co. for Decemeber 31, 2014 and 2013, is as follows: Additional data obtained from an examination of the accounts in the ledger for 2014 are as follows: Equipment and land were acquired for cash There were no disposals of equipment during the year. The investments were sold for dollar 91,800 cash. The common stock was issued for cash. There was a dollar 141, 680 credit to Retained Earnings for net income. There was a dollar 102,000 debit to Retained Earnings for cash dividents declared. Instructions Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.

Explanation / Answer

Cash Flow Statement for the year ending 31 Dec 2014 A) Cash Flows from Operating Activities Amount Net Profit Before Tax & Extra Ordinary Item $1,41,680 Adjustments for: Add Depreciation (99110-84320) $14,790 Add: Loss on sale of investment (102000-91800) $10,200 Operating Profit before working capital changes $1,66,670 Adjustments for Current Assets & Current Liabilties Increase in Accounts Payable (205700-194140) $11,560 Increase in Accrued Expense Payable (30600-26860) $3,740 Less Increase in Inventories (298520-289850) -$8,670 Less : Increase in Accounts Receivable (207230-188190) -$19,040 Cash Genearted from Operations $1,54,260 Taxes Paid $0 Cash before Extra Ordinary Items $1,54,260 Extra-ordinary items $0 Net Cash from (Used in) Operations $1,54,260 B) Cash Flows from Investing Activities Sale of Investment $91,800 Purchase of Land -$2,95,800 Purchase of Equipment (438600-358020) -$80,580 Net Cash from Investing Activities -$2,84,580 C) Cash Flows from Financing Activities Payment of Dividend (20400+102000-25500) -$96,900 Issue of Common Stock (354000+202000)-(204000+102000) $2,50,000 Net Cash from Financing Activities $1,53,100 Increase or Decrease in Cash $22,780 Cash & Equivalent in the beginning $47,940 Cash & Equivalent at the end $70,720

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.