HAMPTON COMPANY Comparative Balance Sheets December 31 Assets 2014 2013 Cash $ 8

Question

HAMPTON COMPANY Comparative Balance Sheets December 31 Assets 2014 2013 Cash $ 83,000 $ 22,000 Accounts receivable 85,000 76,000 Inventory 175,000 189,000 Land 75,000 100,000 Equipment 250,000 200,000 Accumulated depreciation-equipment (61,000) (32,000) Total $607,000 $555,000 Prepare statement of cash flows and compute free cash flow. (LO 3, 4) Prepare a statement of cash flows—indirect method. (LO 3) Additional information: 1. Net income for 2014 was $93,000. 2. Cash dividends of $35,000 were declared and paid. 3. Bonds payable amounting to $50,000 were redeemed for cash $50,000. 4. Common stock was issued for $52,000 cash. 5. No equipment was sold during 2014. Instructions Prepare a statement of cash flows for 2014 using the indirect method.

Explanation / Answer

Hampton Company Cash flow Statement for the period ending Dec31.2014. Indirect Method Details Amt $ Cash Flow From Operating Activities Net Income              93,000 Adjustments to reconcile net income/loss to net cash provided Add Depreciation              29,000 Less : Capital Gain Less Invstment Income Add : Capital Loss Add: investment Loss Increased Accounts Receivable              (9,000) Decreased Inventory              14,000 Prepaid Expenses Decreased Accounts Payable              (8,000) Accrued Expenses Income Tax Payable Total Cash Flow From Operating Activities            119,000 Cash Flow From Investing Activities Cash Inflow from sales of assets              25,000 Cash outflow from purchase of assets            (50,000) Cash Inflow from sales of investments Cash outflow from purchase of Investments Total Cash Flow From Investing Activities            (25,000) Cash Flow From Financing Activities Cash received from issue of Common stock              52,000 Cash paid for Bond redemption            (50,000) Cash Paid for Dividend Payment            (35,000) Cash paid for stock repurchase TotalCash Flow From Financing Activities            (33,000) Total Cash Flow from Operating. Investing and Financing Activities              61,000 Intial Cash Balance              22,000 Net Effect of Cash Flow during the period              61,000 Closing Cash Balance              83,000

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