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, $159,230.

Depreciation reported on the income statement, $34,400.

Equipment was purchased at a cost of $66,450, and fully depreciated equipment costing $18,660 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 $16 for cash.

Cash dividends declared and paid, $97,030.

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.

Dec. 31, 2014 Dec. 31, 2013 Assets Cash $60,970 $75,110 Accounts receivable (net) 93,690 101,260 Merchandise inventory 133,850 125,520 Prepaid expenses 5,450 3,800 Equipment 272,650 224,860 Accumulated depreciation-equipment (70,890) (55,150) Total $495,720 $475,400 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $104,100 $99,360 Mortgage note payable 0 142,620 Common stock, $1 par 16,000 10,000 Paid-in capital in excess of par-common stock 224,000 134,000 Retained earnings 151,620 89,420 Total $495,720 $475,400

Explanation / Answer

Cash Flow Statement Net Income 159230 Depreciation 34400 Loss on Asset Discarded 18660 Decrease in Receivables 7570 Increase in Inventory -8330 Increase in Prepaid Expenses -1650 Increase in Accounts Opayable 4740 Cash Flow from Operations 214620 Cash Flow from Investing Activities Purchase of Equipment -109240 Cash Flow from Investing Activities -109240 Cash Flow from Investing Activities Shares Issued 96000 Dividend Paid -97030 Cash Flow -1030

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

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