PARTV- STATEMENT OF CASH FLOWS -Indirect Method (20 Points) Traynham Company run
ID: 2544141 • Letter: P
Question
PARTV- STATEMENT OF CASH FLOWS -Indirect Method (20 Points) Traynham Company runs a retail company and recently completed its third year of operations. The balance sheet and income statement follow: Income Statement for 2014 2014 $52,000 $ 56,100 Sales revenue 2013 Assets Cash Accounts receivable Inventory Equipment Accumulated depreciation Total assets Liabilities and Equity Accounts payable Income taxes payable $337,40 203,00 4,30 87,000 24,300 Cost of goods sold 21,000 30,800 29,200 Depreciation expense 123,000 92,000 Other expenses -28.500-24.200 Income taxes $199.300 $179.400 Net income S 28,600 36,300 33,000 11,000 8,000 28,000 36,000 15,000 12,000 38,000 31,000 Long-term notes payable Common stock, $2 par Paid-in capital in excess of par Retained earnings Total liabilities and equity $199.300 $179.400 ditional Information on Year 2014 Transactions Purchased equipment by paying signing a long-term note for $8,000 and paying cash for the balance 1. 2. Paid cash as a payment on the long-term notes payable 3. Issued 100 shares of common stock for cash 4. Declared and paid cash dividends of $16,000 ions: Prepare a statement of cash flows for 2014 using the indirect method.Explanation / Answer
Cash flow indirect method Cash flow from operating activities Net income 28600 Adjustments to reconcile the net income Depreciation expense 4300 Changes in current asset and liabilities decrease in accounts receivable 3300 Increase in Inventory -1600 Increase in accounts payable 3300 Increase in Income tax payable 3000 12300 Cash flow from operating activities 40900 Cash flow from Investing activities Equipment purchased -23000 Cash flow from Investing activities -23000 Cash flow from Financing activities Common stock 3000 Paid in capital in excess of par 7000 Long term notes payable -16000 Dividend paid -16000 Cash flow from Financing activities -22000 Net Cash and cash equivalent -4100 Add Beginning cash and cash equivalent 56100 Ending cash and cash equivalent 52000
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