Exercise 13-12 The following items were gathered from Daniels Distributing\'s ge

Question

Exercise 13-12 The following items were gathered from Daniels Distributing's general ledger: Purchase of marketable securities Depreciation and amortization expense Declaration of preferred dividends Decrease in Prepaid Assets Gain on sale of equipment Beginning Cash balance Payment for purchase of equipment Increase in Accounts Receivable Stock-based compensation Proceeds from issuing common stock Increase in Inventory Decrease in Accounts Payable Ending Cash balance Using the indirect method, construct Daniels Distributing's statement of cash flows. (If amount decreases cash flow then enter with a negative sign preceding the number or parenthesis, e.g. -15,000 or (15,000).)

Explanation / Answer

Daniels Distributing

Statement of Cash Flow (Amounts in $)

Cash Flows from Operating Activities Net Income 429,500 Adjustments to reconcile net income to operating cash flows Add: Depreciation and amortization expense 32,440 Add: Decrease in Prepaid Assets 4,000 Less: Gain on sale of Equipment (5,300) Less: Increase in Accounts Receivable (16,790) Less: Increase in Inventory (15,463) Less: Decrease in Accounts Payable (14,150) Add: Stock Based Compensation 181,200 Total of Adjustments 165,937 Net Cash provided by Operating Activities (A) 595,437 Cash Flows from Investing Activities Purchase of marketable securities (201,600) Payment for purchase of equipment (80,985) Net cash used by Investing activities (B) (282,585) Cash Flows from Financing Activities Proceeds from loan 126,700 Proceeds from issuing Common Stock 25,110 Net cash provided by Financing activities (C) 151,810 Net increase in Cash Balance (A+B+C) 464,662 Add: Beginning Cash Balance 43,490 Ending Cash Balance 508,152

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