Sharp Screen Films, Inc., is developing its annual financial statements at Decem

Question

Sharp Screen Films, Inc., is developing its annual financial statements at December 31, 2015. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized as follows: 2015 2014 Balance sheet at December 31 Cash $ 64,850 $ 63,700 Accounts receivable 15,750 22,850 Merchandise inventory 22,850 18,200 Property and equipment 209,450 150,700 Less: Accumulated depreciation (59,500 ) (45,950 ) $ 253,400 $ 209,500 Accounts payable $ 9,400 $ 19,700 Wages payable 2,500 3,000 Note payable, long-term 60,600 71,400 Contributed capital 99,300 66,100 Retained earnings 81,600 49,300 $ 253,400 $ 209,500 Income statement for 2015 Sales $ 197,000 Cost of goods sold 94,000 Depreciation expense 13,550 Other expenses 43,200 Net income $ 46,250 Additional Data: a. Bought equipment for cash, $58,750. b. Paid $10,800 on the long-term note payable. c. Issued new shares of stock for $33,200 cash. d. Dividends of $13,950 were declared and paid. e. Other expenses all relate to wages. f. Accounts payable includes only inventory purchases made on credit. Required: 1. Prepare the statement of cash flows using the indirect method for the year ended December 31, 2015. (List cash outflows as negative amounts.)

Explanation / Answer

cash flow from operating activity net income 46250 Add/leess:adjustment to reconcile net income to cash flow Depreciation 13550 Decrease in receivable (22850 - 15750 ) 7100 Increase in inventory (18200 -22850 ) -4650 Decrease in payable   (19700 -9400 ) -10300 Decrease in wage payable (3000-2500) -500 net cash provided by operating activity (A) 51450 cash from investing activity Purchase of equipment - 58750 net cash used by investing activity (B) -58750 cash flow from financing activity repayment of note - 10800 dividend paid -13950 issue of shares 33200 net cash provided by financing activity (C) 8450 Increase /decrease in cash   (A+B+C) 1150 Add:beginning cash balance 63700 ending cash balance 64850

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