Question 1 The following items were gathered from Ledbetter Company’s general le

Question

Question 1

The following items were gathered from Ledbetter Company’s general ledger:

Using the indirect method, construct Ledbetter’s statement of cash flows. (Enter amounts that decrease cash using either a negative sign preceding the number e.g. -4,527 or parentheses e.g. (4,527).)

Net income $59,210 Loss on sale of equipment 13,260 Beginning cash balance 18,910 Purchase of new factory equipment 76,810 Proceeds from sale of equipment 28,300 Depreciation 9,710 Payment of cash dividends 20,460 Increase in accounts receivable 6,810 Proceeds from bank loan 26,000 Decrease in inventory 16,050 Increase in accounts payable 13,680 Increase in accrued liabilities 4,320

Explanation / Answer

Statement of Cash Flows Cash Flows from Operating Activities: Net income 59210 Adjustments to reconcile net income to Net cash provided by operating activities Depreciation expense 9710 Loss on sale of equipment 13260 Increase in accounts receivable -6810 Decrease in inventory 16050 Increase in accounts payable 13680 Increase in accrued liabilities 4320 50210 Net cash provided by operating activities 109420 Cash Flows from Investing Activities: Purchase of new factory equipment -76810 Proceeds from sale of equipment 28300 Net Cash used by Investing Activities -48510 Cash Flows from Financing Activities Payment of Cash Dividends -20460 Proceeds from bank loan 26000 Net Cash Used by Financing Activities 5540 Net Increase in Cash 66450 Beginning cash balance 18910 Cash at End of Period 85360

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