5. The balance sheets for Kinder Company showed the following information. Addit

Question

5. The balance sheets for Kinder Company showed the following information. Additional information concerning transactions and events during presented below. 2015 are Kinder Company Balance Sheet December 31 Cash Accounts receivable (net) Inventory Long-term investments Property, plant & equipment Accumulated depreciation -2015 2014 -- $35,900 10,200 20,300 42,000 15,000 236,500 150,000 38,300 35,000 (37.700 25,000) $308,000 $212.500 17,000 26,500 Accounts payable Accrued liabilities Long-term notes payable Common stock Retained earnings 21,000 70,000 130,000 17,000 50,000 90,000 70,000 29.000 $308,000 $212500 Additional data: 1. Net income for the year 2015, $71,000. 2. Depreciation on plant assets for the year, $12,700. 3. Sold the long-term investments for $28,000 (assume gain or loss is ordinary). 4. Paid dividends of $30,000. 5. Purchased machinery costing $21,500, paid cash. 6. Purchased machinery and gave a $60,000 long-term note payable. 7. Paid a $40,000 long-term note payable by issuing common stock. Instructions Using the format provided on the next page, prepare a statement of cash flows (using the indirect method) for 2015 for Kinder Company.

Explanation / Answer

Answer to the Question

Kinder company Statement of Cash Flow For the year ended Dec 31,2015 CASH FLOW FROM OPERATING ACTIVITIES $ $ Net Income                71,000 Adjustments to reconcile net income to net cash provided
by Operating activities Depreciation                12,700 Profit on sales oh long term investment               (13,000) Change in working capital Increase Account receivable               (18,000) Decrease Inventories                  7,000 Decrease Accounts payable                 (9,500) Increase in Accrued liabilities                  4,000 Increase Long term notes payable                20,000 Net cash provided by operating activities                 74,200 CASH FLOW FROM INVESTING ACTIVITIES Sales of Long term investment                28,000 Purchase of machinery( Paid in cash)               (86,500) NET CASH FLOW FROM INVESTING ACTIVITY                (58,500) CASH FLOW FROM FINANCING ACTIVITY Issue of common stock                40,000 Dividend paid               (30,000) NET CASH FLOW FROM FINANCING ACTIVITY                 10,000 NET INCREASE/(DECREASE) IN CASH                 25,700 Cash Jan ,1 2015                 10,200 Cash Dec,31 2015             35,900.00

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