Statement of Cash Flows—Indirect Method The comparative balance sheet of Amelia
ID: 2500597 • Letter: S
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, $171,160.
Depreciation reported on the income statement, $31,950.
Equipment was purchased at a cost of $61,590, and fully depreciated equipment costing $17,370 was discarded, with no salvage realized.
The mortgage note payable was not due until 2016, but the terms permitted earlier payment without penalty.
5,000 shares of common stock were issued at $16 for cash.
Cash dividends declared and paid, $104,300.
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 $56,690 $69,910 Accounts receivable (net) 87,110 94,240 Merchandise inventory 124,440 116,820 Prepaid expenses 5,070 3,540 Equipment 253,500 209,280 Accumulated depreciation-equipment (65,910) (51,330) Total $460,900 $442,460 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $96,790 $92,470 Mortgage note payable 0 132,740 Common stock, $1 par 14,000 9,000 Paid-in capital in excess of par-common stock 200,000 125,000 Retained earnings 150,110 83,250 Total $460,900 $442,460Explanation / Answer
AMELIA ENETRPRISES INC.
Statement of Cash Flows
For the Year Ended December 31, 2014
Cash flows from operating activities
Net income
$171,160
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation
$31,950
Changes in current operating assets and liabilities:
Decrease in accounts receivable
$7,130
Increase in merchandise inventory
($7,620)
Increase in prepaid expenses
($1,530)
Increase in accounts payable
$4,320
$2,300
Net cash flow from operating activities
$205,410
Cash flows from investing activities:
Cash paid for equipment
($61,590)
Net cash flow used for investing activities
($61,590)
Cash flows from financing activities:
Cash received from sale of common stock
$80,000
Less: Cash paid for dividends
($104,300)
Cash paid to retire mortgage note payable
($132,740)
Net cash flow used in financing activities
($157,040)
Net decrease in cash
($13,220)
Cash at beginning of period
$69,910
Cash at end of period
$56,690
AMELIA ENETRPRISES INC.
Statement of Cash Flows
For the Year Ended December 31, 2014
Cash flows from operating activities
Net income
$171,160
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation
$31,950
Changes in current operating assets and liabilities:
Decrease in accounts receivable
$7,130
Increase in merchandise inventory
($7,620)
Increase in prepaid expenses
($1,530)
Increase in accounts payable
$4,320
$2,300
Net cash flow from operating activities
$205,410
Cash flows from investing activities:
Cash paid for equipment
($61,590)
Net cash flow used for investing activities
($61,590)
Cash flows from financing activities:
Cash received from sale of common stock
$80,000
Less: Cash paid for dividends
($104,300)
Cash paid to retire mortgage note payable
($132,740)
Net cash flow used in financing activities
($157,040)
Net decrease in cash
($13,220)
Cash at beginning of period
$69,910
Cash at end of period
$56,690
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