stockholders\' equity 692,000 b. Prepare a statement of cash flows for the year

Question

stockholders' equity 692,000 b. Prepare a statement of cash flows for the year ended December 31, 2014, using the indirect method. Many firms treat increases/decreases in notes payable (or short-term debt) as financing activities rather than operating activities. For this reason, "Increases in notes payable" has been listed as the first Financing Activity. (Amounts to be deducted should be indicated by a minus sign.) HOEMAN, INC. Statement of Cash Flows For the Year Ended December 31, 2014 Cash flows from operating activities: Add (deduct) items not affecting cash: 0 Cash flows from investing activities Cash flows from financing activities Increase in notes payable 0 0 Cash balance. January 1, 2014 Cash balance, December 31, 2014 References eBook & Resources Worksheet Learning Objective: 09-10 lllu indirect methods of presenting Difficulty: Hard Learning Objective: 09-11 Sun significant to financial analysts

Explanation / Answer

HOEMAN INC. Compararive Balacne Sheets At December 31,2014 and 2013 2014 2013 Assets: Current assets: Cash        56,000        48,000 Accounts Receivable    1,33,000    1,44,500 Inventory    1,68,000    1,77,500 Total Current assets    3,57,000    3,70,000 Land    1,43,000    1,43,000 Buildings    4,21,500    2,89,500 Less: Accumulated Depreciation -1,25,500 -1,10,500 Total Land and Buildings    4,39,000    3,22,000 Total assets    7,96,000    6,92,000 Liabilities: Current Liabilities: Accounts Payable    1,74,500    1,90,500 Notes Payable    1,57,000    1,25,000 Total Current Liabilities    3,31,500    3,15,500 Longterm debt    1,97,000    1,47,000 Stock holders Equity: Common stock        52,500        48,500 Retained Earnings    2,15,000    1,81,000 Total Stockholders equity    2,67,500    2,29,500 Total Liabilities and stockholders's equity    7,96,000    6,92,000 HOEMAN INC. Statement of cash flows For the year ended December 31,2014 Cash flows from operating activities Net income        97,500 Add (deduct) items not affecting cash Depreciation        15,000 Decerease in Accounts receiable        11,500 Decerease in Inventory           9,500 Decerease in Accounts payable       -16,000 Net cash flow from operating activities     1,17,500 Cash flows from investing activities: New buildings acquired -1,32,000 Net cash used in Investing activities -1,32,000 Cash flow from financing activities: Increase in Notes payable        32,000 Increase in longterm debt        50,000 issue of common stock           4,000 Dividend paid       -63,500 Net cash flow from financing activities         22,500           8,000 Cash balacne January 1, 2014         48,000 Cash balacne December 31, 2014         56,000

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