The balance sheet for Plasma Screens Corporation along with additional informati

Question

The balance sheet for Plasma Screens Corporation along with additional information is provided below: PLASMA SCREENS CORPORATION Balance Sheets December 31, 2015 and 2014 2015 2014 Assets Current assets: Cash Accounts receivable $ 146,750 $ 159,000 89,500 75,500 1,500 76,000 90,000 3,000 Prepaid rent Long-term assets: Land Equipment Accumulated depreciation 455,000 645,000 (415,000) (258,000) 455,000 750,000 Total assets 1,105,750 $ 1,167,500 Liabilities and Stockholders' Equity: Current liabilities Accounts payable Interest payable Income tax payable S 94,000 $ 80,500 13,500 4,500 6,750 7,000 Long-term liabilities Notes payable 112,500 225,000 Stockholders' equity: Common stock Retained earnings 675,000 210,500 675,000 169,000 Total liabilities and stockholders' equity 1,105,750 $ 1,167,500 Additional Information for 2015 1. Net income is $64,000 2. The company purchases $105,000 in equipment. 3. Depreciation expense is $157,000 4. The company repays $112,500 in notes payable 5. The company declares and pays a cash dividend of $22,500 Required Prepare the statement of cash flows using the indirect method. (List cash outflows and any decrease in cash as negative amounts.)

Explanation / Answer

PLASMA SCREENS CORPORATION

PLASMA SCREENS CORPORATION

Statement of Cash Flows - Indirect Method For the year ended December 31, 2012 Cash flows from operating activities Net income 64,000 Adjustments for noncash effects Depreciation Expense 157,000 Changes in current assets and current liabilities: Decrease in Accounts Receivable 13,500 Increase in Accounts Payable 13,500 Increase in Income Tax Payable 2,500 Increase in Inventory -14,500 Increase in Prepaid Rent -1,500 Decrease in Interest Payable -6,750 Net cash flows from operating activities 227,750 Cash flows from investing activities Purchase of Equipment -105,000 Net cash flows from investing activities -105,000 Cash flows from financing activities Notes Payable Repaid -112,500 Dividends Paid -22,500 Net cash flows from financing activities -135,000 Net increase in cash -12,250 Cash at the beginning of the period 89,500 Cash at the end of the period 76,000

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