EXERCISE 13-7 Comparative Prepare a Statement of Cash Flows (Indirect Method) (L

Question

EXERCISE 13-7 Comparative Prepare a Statement of Cash Flows (Indirect Method) (LO2, LO3) financial statement data for Holly Company are given below December 31 2002 2001 Cash Accounts receivable . 36 75 29 61 180 Plant and equipment (40)30) $285 $247 ..45 90 150 $ 39 70 138 $247 Total liabilities and stockholders' equity . . ..$285 For 2002, the company reported net income as follows: Less cost of goods sold . . Gross margin Less operating expenses $500 . ..300 200 180 Net income Dividends of $8 were declared and paid during 2002. There were no sales of plant and equipment during the year Required: Using the indirect method, prepare a statement of cash flows for 2002. EXERCISE 13-8 (Appendix 13A) Net Cash Provided by Operating Activities (Direct Method) (LO4) Refer to the data for Holly Company in Exercise 13-7 Required Using the direct method, convert the company's income statement to a cash basis.

Explanation / Answer

Statement of cash flow :

Cash flow from operating activities Net income 20 Adjustment to reconcile net income Depreciation 10 Increase account receivable -7 Increase inventory -14 Increase account payable 6 Net cash flow from operating activities 15 Cash flow from investing activities Purchase plant and equipment -30 Net cash flow from investing activities -30 Cash flow from financing activities Issue common stock 20 Dividend paid -8 Net cash flow from financing activities 12 Net cash flow -3 Beginning cash 7 Ending cash 4

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