Financial data from the accounts of Dowling Corporation: Cash Accounts receivabl

Question

Financial data from the accounts of Dowling Corporation: Cash Accounts receivable, net Inventory Prepaid rent Machinery 12/31/18 36,000 143,000 130,000 11,000 189,000 Accumulated depreciation-Machinery (90,000) 175,000 Accumulated depreciation-Equipment(60,000) 534,000 12/31/17 25,000 118,000 140,000 10,000 170,000 (70,000) 190,000 45,000 538,000 Equipment Accounts payable Salaries payable Accrued expenses Income taxes payable Bonds payable Discount on bonds payable Common stock Retained earnings 18,000 10,000 8,000 10,000 200,000 (7,000) 210,000 85,000 534,000 28,000 17,000 18,000 13,000 200,000 (8,000) 200,000 70,000 538,000

Explanation / Answer

Statement of cash flow for Dowling Corporation for the year ended 31/12/18 using Indirect Method Cash flow from Operating activities Net Income $25,000 Adjustments to Net Income Gain on sale of equipment -$4,000 Depreciation $65,000 Increase in Accounts Receivables -$25,000 Decrease in Inventory $10,000 Increase in Prepaid rent -$1,000 Decrease in Accounts Payable -$10,000 Decrease in salary payable -$7,000 Decrease in Accrued Expenses -$10,000 Decrease in Income Tax Payable -$3,000 $15,000 Net cash provided by Operating activities $40,000 Cash flow from Investing activities Purchase of Machinery -$19,000 Purchase of equipment -$25,000 Sale of equipment $15,000 Net cash used for Investing activities -$29,000 Cash flow from Financing activities Issue of Common stock $10,000 Dividend paid -$10,000 Cash provided by financing activities $0 Net Cash surplus / (deficit) $11,000 Add : Cash balance as on 31/12/17 $25,000 Cash balance as on 31/12/18 $36,000

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