The accounts below appear in the ledger of Anita Baker Company. Retained Earning

Question

The accounts below appear in the ledger of Anita Baker Company.

Retained Earnings

Dr.

Cr.

Bal.

Equipment

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Cr.

Bal.

Accumulated Depreciation—Equipment

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Bal.

From the postings in the accounts above, indicate how the information is reported on a statement of cash flows by preparing a partial statement of cash flows using the indirect method. The loss on sale of equipment (November 15) was $6,500. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

ANITA BAKER COMPANY
Statement of Cash Flows (Partial)
For the Year Ended December 31, 2014

XXX

$XXX

Open Show Work

Retained Earnings

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Cr.

Bal.

Jan. 1, 2014 Credit Balance $42,560 Aug. 15 Dividends (cash) $14,060 28,500 Dec. 31 Net Income for 2014 $49,300 77,800

Equipment

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Cr.

Bal.

Jan. 1, 2014 Debit Balance $139,910 Aug. 3 Purchase of Equipment $62,890 202,800 Sept. 10 Cost of Equipment Constructed 48,180 250,980 Nov. 15 Equipment Sold $65,660 185,320

Accumulated Depreciation—Equipment

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Bal.

Jan. 1, 2014 Credit Balance $84,940 Apr. 8 Extraordinary Repairs $21,200 63,740 Nov. 15 Accum. Depreciation on Equipment Sold 25,330 38,410 Dec. 31 Depreciation for 2014 $17,010 55,420

Explanation / Answer

Cash flow from operating Activity Net income 49300 ADD Depreciation Expense 17010 Loss On Disposal of Plant Asset 6500 Cash flow from operating Activity 72810 Cash flow from Investing Activity Sale of Plant Asset =65660-25330-6500 33830 Construction of equipment -48180 Purchase of equipment -62890 Cash flow from Investing Activity -77240 Cash flow from Financing Activity Payment of Cash dividend -14060

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