Statement of Cash Flows—Indirect Method The comparative balance sheet of Tru-Bui

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Statement of Cash Flows—Indirect Method
The comparative balance sheet of Tru-Built Construction Inc. for December 31, 2014 and 2013, is as follows:
    Dec. 31, 2014   Dec. 31, 2013
Assets        
Cash   $186      $62     
Accounts receivable (net)   106      77     
Inventories   66      42     
Land   151      175     
Equipment   85      67     
Accumulated depreciation-equipment   (23)      (12)     
    Total   $571      $411     
Liabilities and Stockholders' Equity        
Accounts payable (merchandise creditors)   $72      $62     
Dividends payable   11      -     
Common stock, $10 par   38      19     
Paid-in capital in excess of par-common stock   83      48     
Retained earnings   367      282     
    Total   $571      $411     
The following additional information is taken from the records:
Land was sold for $60.
Equipment was acquired for cash.
There were no disposals of equipment during the year.
The common stock was issued for cash.
There was a $123 credit to Retained Earnings for net income.
There was a $38 debit to Retained Earnings for cash dividends declared.

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a. Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Use the minus sign to indicate cash out flows, cash payments, decreases in cash and for any adjustments, if required.

Tru-Built Construction Inc.
Statement of Cash Flows
For the Year Ended December 31, 2014
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 provided by 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
$

b. Was Tru-Built Construction Inc.'s cash flow from operations more or less than net income?

Explanation / Answer

a)

Tru-Built Construction Inc.
Statement of Cash Flows
For the Year Ended December 31, 2014

b. Yes, Tru-Built Construction Inc.'s cash flow from operations($124) more or less than net income ($123).

Amount $ Amount $ Cash flow from the operating activities: Net Income 123 Add: Depreciation 11 Less: Gain on Sale of land (36) Less: increase in accounts receivable (29) Less: Increase in inventories (24) Add: increase in accounts payable 10 add: Increase in dividend payable 11 Cash from the Operating Activities 66 Cash flow from the Investing Activities: Purchase of equipments (18) Sale of Land 60 Cash from the investing activities 42 Cash flow from the Financing Activities: Cash dividend paid (38) Issue of Common Stock 19 Paid in capital -common stock 35 16 Total cash inflow from all activities 124 Add: Cash at the beginning of the year 62 Cash at the end of the year 186

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