Statement of Cash Flows—Indirect Method The comparative balance sheet of Amelia

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, $103,580.

Depreciation reported on the income statement, $39,140.

Equipment was purchased at a cost of $76,550, and fully depreciated equipment costing $20,960 was discarded, with no salvage realized.

The mortgage note payable was not due until 2016, 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, $63,120.

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 $68,910 $84,360 Accounts receivable (net) 105,890 113,730 Merchandise inventory 151,290 140,970 Prepaid expenses 6,160 4,270 Equipment 308,150 252,560 Accumulated depreciation-equipment (80,120) (61,940) Total $560,280 $533,950 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $117,660 $111,600 Mortgage note payable 0 160,190 Common stock, $1 par 18,000 11,000 Paid-in capital in excess of par-common stock 284,000 151,000 Retained earnings 140,620 100,160 Total $560,280 $533,950

Explanation / Answer

Amelia Enterprises, Inc.

Amelia Enterprises, Inc.

Statement of Cash Flows For the Year Ended December 31, 2014 Cash flows from operating activities: Amt $ Net Income                                            103,580 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation added back                                               39,140 Changes in current operating assets and liabilities: Decrease in Net AR                                                 7,840 Increase in Inventory                                            (10,320) Increase in Prepaid                                               (1,890) Increase in AP                                                 6,060 Net cash flow from operating activities                                            144,410 Cash flows from investing activities: Fixed asset investment                                            (76,550) Net cash flow used for investing activities                                            (76,550) Cash flows from financing activities: Capital received                                            140,000 Mortgage note repaid                                          (160,190) Dividend paid                                            (63,120) Net cash flow used in financing activities                                            (83,310) Net Cash flow from Operating , Investing and Financing Activities                                            (15,450) Cash at beginning of the year                                               84,360 Cash at end of the year                                               68,910

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