Statement of Cash Flows—Indirect Method The comparative balance sheet of Amelia
ID: 2424802 • Letter: S
Question
Statement of Cash Flows—Indirect Method
The comparative balance sheet of Amelia Enterprises, Inc. at December 31, 2014 and 2013, is as follows:
Additional data obtained from the income statement and from an examination of the accounts in the ledger for 2014 are as follows:
Net income, $126,770.
Depreciation reported on the income statement, $34,180.
Equipment was purchased at a cost of $66,710, and fully depreciated equipment costing $18,340 was discarded, with no salvage realized.
The mortgage note payable was not due until 2016, but the terms permitted earlier payment without penalty.
6,000 shares of common stock were issued at $18 for cash.
Cash dividends declared and paid, $77,250.
Required:
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.
Amelia Enterprises, 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 used for investing activities
Cash flows from financing activities:
$
$
Net cash flow used in financing activities
$
Cash at beginning of the year
Cash at end of the year
$
Dec. 31, 2014 Dec. 31, 2013 Assets Cash $60,240 $73,830 Accounts receivable (net) 92,570 99,520 Merchandise inventory 132,240 123,350 Prepaid expenses 5,390 3,740 Equipment 269,380 221,010 Accumulated depreciation-equipment (70,040) (54,200) Total $489,780 $467,250 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $102,850 $97,660 Mortgage note payable 0 140,180 Common stock, $1 par 16,000 10,000 Paid-in capital in excess of par-common stock 234,000 132,000 Retained earnings 136,930 87,410 Total $489,780 $467,250Explanation / Answer
Opening Equipment $221,010
Less: Cost of Equipment discarded $66,710
-----------
$154,300
Ending Equipment $269,380
-------------
Purchase of Equipmement 115080
Amelia,Enterprises,Inc
Statement of Cash Flows
For the Years Ending December 31, 2014
2,014
Cash Flows from Operating Activities
Net Income
126,770
Add Expenses Not Requiring Cash:
Depreciation
34,180
Loss on sale of Equipment
48,370
Other Adjustments:
Add Reduction in Accounts Receivable
6,950
Add Increase in Accounts Payable
5,190
Subtract Increase in Inventory
(8,890)
Subtract Increase in Prepaid Expenses
(1,650)
Net Cash from Operating Activities
210,920
Cash Flows from Investing Activities
Sale of Fixed Assets
-
Purchase of New Equipment
(115,080)
Net Cash Used for Investing Activities
(115,080)
Cash Flows from Financing Activities
Payment of Mortgage Principal
(140,180)
Issue of Shares
108,000
Cash dividend paid
(77,250)
Net Cash from Financing Activities
(109,430)
NET INCREASE/(DECREASE) IN CASH
(13,590)
CASH, BEGINNING OF YEAR
73,830
CASH, END OF YEAR
60,240
Loss on sale of asset=$66710-$18,340=$48,370
Amelia,Enterprises,Inc
Statement of Cash Flows
For the Years Ending December 31, 2014
2,014
Cash Flows from Operating Activities
Net Income
126,770
Add Expenses Not Requiring Cash:
Depreciation
34,180
Loss on sale of Equipment
48,370
Other Adjustments:
Add Reduction in Accounts Receivable
6,950
Add Increase in Accounts Payable
5,190
Subtract Increase in Inventory
(8,890)
Subtract Increase in Prepaid Expenses
(1,650)
Net Cash from Operating Activities
210,920
Cash Flows from Investing Activities
Sale of Fixed Assets
-
Purchase of New Equipment
(115,080)
Net Cash Used for Investing Activities
(115,080)
Cash Flows from Financing Activities
Payment of Mortgage Principal
(140,180)
Issue of Shares
108,000
Cash dividend paid
(77,250)
Net Cash from Financing Activities
(109,430)
NET INCREASE/(DECREASE) IN CASH
(13,590)
CASH, BEGINNING OF YEAR
73,830
CASH, END OF YEAR
60,240
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